Workspace Group Annual Report 2021

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FY2021 Annual Report · Workspace Group

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Contents

Home to London’s
Brightest Businesses

Workspace Group PLC
Annual Report and Accounts 2021

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Workspace Group PLC
Annual Report and Accounts 2021

INTRODUCTION

Our purpose is to
give businesses the
freedom to grow.

WHO WE ARE

Workspace owns and manages
approximately four million sq. ft. of
business space in London across 58
properties. We are home to thousands
of London’s brightest businesses,
including fast-growing and established
brands across a wide range of sectors.

Our purpose is based on the belief
that in the right space, teams can
achieve more. That in environments
tailored to them, free from constraint
and compromise, teams are best able
to collaborate, build their culture and
realise their potential together.

Our Strategy, see page 29

Customer at Kennington Park

Contents

CONTENTS

STRATEGIC REPORT
01
Introduction
06 Chairman’s statement
08
09 Chief Executive Officer’s

Investment proposition

statement

11 Our business model
20 Our stakeholders
26 Our response to market

trends
29 Our strategy
34 Doing the Right Thing
57 Our Key performance

indicators

63 Principal risks and
uncertainties

71 Business review
81 Compliance statements

OUR GOVERNANCE
99

Introduction to corporate
governance

102 Chairman’s governance letter
104 Board leadership and
company purpose

124 Division of responsibilities
136 Composition, succession

and evaluation

149 Audit, risk and internal

control
167 Remuneration
198 Report of the Directors
202 Directors’ responsibility

statement

FINANCIAL STATEMENTS
203 Independent auditor’s
report to the members
of Workspace Group PLC

210 Consolidated income

statement

210 Consolidated statement
of comprehensive income

211 Consolidated balance sheet
212 Consolidated statement
of changes in equity
212 Consolidated statement

of cash flows

213 Notes to the financial

statements

235 Parent Company balance

sheet

236 Parent Company statement

of changes in equity
236 Notes to the Parent
Company financial
statements

ADDITIONAL INFORMATION
239 Five-year performance
240 Property portfolio
241 Glossary of terms
243 Investor information

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Workspace Group PLC
Annual Report and Accounts 2021

INTRODUCTION CONTINUED

In one of the most
challenging years
in our history, our
purpose and values
have driven our
actions and decisions.

AN UNPRECEDENTED YEAR

Our financial performance has been
resilient, despite being impacted by
the £20m of rent discounts we offered
customers and a fall in occupancy.
Customer activity was significantly
lower for much of the year due to
lockdowns but recovered strongly
in the fourth quarter.

Business Review, see page 71

The Frames, Shoreditch

Contents

2020/2021 HIGHLIGHTS

FINANCIAL

OPERATIONAL

ESG

£81.5m

Net rental income

739

Average enquiries per month

2030

Net zero carbon by 2030

£38.7m

Trading profit after interest

Average lettings per month

£300m

Raised in green bond issuance

£2.3bn

Property valuation

81.6%

Like-for-like occupancy

100%

Renewable electricity sourced

£9.38

EPRA NTA per share

£85.1m

Like-for-like rent roll

17.75p

Dividend per share

95%

Rent collection

50%

Rent reduction offered
to customers in Q1 20/21

£35k

Donated to Single
Homeless Project

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Workspace Group PLC
Annual Report and Accounts 2021

Workspace head office
at Kennington Park

Contents

INTRODUCTION CONTINUED

With a spotlight
on ways of working
like never before,
our business model
and strategy are
ideally suited to
the future of work.

A CLEAR MARKET LEADER
IN A CHANGING WORLD

With London shut down for much of the
year, our business has been tested and
has proven remarkably resilient. The
world is changing fast for office space
providers. Companies want to create
the best possible working environment
for their employees and recognise the
value of having their own space in which
to do that.

We have an exciting and significant
opportunity to be the clear market
leader in this changing world.

CEO Statement, see page 9

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Workspace Group PLC
Annual Report and Accounts 2021

INTRODUCTION CONTINUED

As London reopens,
our brand campaign
reminds businesses of
the benefits of working
from work, #WFW.

BRAND CAMPAIGN

Workspace’s brand positioning has
not historically highlighted its leading
position and scale. Now is the time
to change that. Never before has our
flexible offer been more relevant.

Our new campaign reflects our brand
personality and more clearly positions
Workspace in the market. Bold and
visible advertising showcases our offer
and our customers, highlighting to
businesses that working from work
is better with Workspace.

Contents

Workspace advertising
on London buses

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Workspace Group PLC
Annual Report and Accounts 2021

INTRODUCTION CONTINUED

Q&A with the Executive Team

WILL ABBOTT
CHIEF CUSTOMER OFFICER

Contents

Q What has Workspace done to stay
in touch with customers during
the pandemic?

A Maintaining an active dialogue with

our customers is important in normal
market conditions, but has been even
more so during the past year.

Towards the end of the first lockdown,
the team created a Back to Business
hub on our website, containing practical
and helpful guides for customers about
returning to their offices. This included
downloadable resources, such as social
distancing signage and advice on how
best to manage space with teams
returning to work.

Over the last year, we moved our event
programme online and hosted a series
of virtual events for customers, on
topics including wellbeing, innovation
in business and leadership.

The last year has
highlighted the value of
our flexible proposition
more than ever.

Q What are you doing to capture
demand as London reopens
for business?

A We launched a brand new website at

the end of 2020 to make it easier to find
Workspace online and improve the user
experience, especially via mobile. In
parallel, we have made enhancements
to our digital and social media
activity to help increase Workspace’s
prominence across these channels.

We launched a new monthly customer

Aligned with the easing of lockdown,

newsletter, The Works, which
introduces exciting new businesses
who’ve moved in, showcases new
space we’ve launched and highlights
upcoming events.

our #WFW campaign is running across
the Capital on London buses, billboards,
digital radio and online. The advertising
will help put Workspace front of mind
for those business owners, and their
teams, who are planning their own
return to office working.

Will was appointed in
2020. He is responsible
for marketing, brand and
customer engagement.

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06

Workspace Group PLC
Annual Report and Accounts 2021

CHAIRMAN’S STATEMENT

Contents

Stephen Hubbard
Chairman

With London shut down
for months due to the
pandemic, this year has
been a true test of our
business model and
strategy. We have
passed the test and
I am extremely proud
of the way the Company
has pulled together.

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Workspace Group PLC
Annual Report and Accounts 2021

CHAIRMAN’S STATEMENT CONTINUED

I would like to thank
all our employees,
our management
team and the Board
for their outstanding
commitment in helping
us navigate these
challenging times.

£81.5m

Net rental income

In my first year as Chairman of Workspace, the
Company has experienced the unprecedented
challenge of operating through the global
pandemic. With London shut down on and off
for most of the year, it has been a true test of
our business model and strategy. Workspace
has certainly passed the test and the Board
and I are extremely proud of the way that
the whole Company has pulled together in
the face of such enormous challenges.

As a result, Workspace’s performance has
been resilient. Our financial results have been
significantly impacted by the 50% rent discount
we offered our customers in the first quarter.
Net rental income was down 33% to £81.5m
but we were able to retain the majority of
customers through the year. Overall occupancy
fell to 77.8%, with like-for-like occupancy closing
the year at 81.6%. The longer-term attractions
of our model and our well-located property
portfolio are well understood by the market and
this was demonstrated by the solid valuation
performance with EPRA NTA per share at £9.38.

We decided at the half year to defer a decision
on the payment of the dividend as the UK was
heading back into a national lockdown at that
time and there was heightened uncertainty.
However, the outcome of the year has been
robust and so, with our committed policy to pay
dividends out of earnings, the Board is able to
recommend a final dividend of 17.75p per share.

Despite the difficulties of operating amidst
a pandemic, the Board has had a very busy
agenda this year. We have continued our
focus on improving diversity across the
Company and have made two important new
appointments to the Board. We welcome
both Rosie Shapland and Lesley-Ann Nash

as Non-Executive Directors, bringing valuable
relevant experience and broad skills across ESG,
risk, finance, audit and governance. They have
both concluded their induction process and
are making a great contribution to the Board.

Much of the discussion at our Board meetings
this year has been centred on ESG, and
particularly climate change. As a result,
Workspace has made real strides in this
area. The Board approved the pathway to
becoming a net zero carbon business by
2030, a challenging but important target.
We also issued our first public bond – a green
bond that raised £300m and was three times
oversubscribed, demonstrating the strong
appeal of our model to fixed income investors.

The social side of our ESG agenda is equally
important, especially this year when upholding
employee and customer wellbeing has
proven to be critical to business success. Our
stakeholder engagement has naturally focused
on customers and employees. Many of our
customers have been severely impacted by the
lockdowns. The support we gave them was well
received and has differentiated Workspace in
the market as a truly customer-centric business.
Our latest customer survey highlighted this
further and I’d like to commend the Workspace
team for achieving a positive customer
advocacy result in such a difficult environment.

Our employees have worked incredibly hard
to keep the business operating effectively
through this time. I have thoroughly enjoyed the
regular breakfast sessions I have hosted with
our employees over the past year. Discussions
have ranged freely across a myriad of subjects
and always thrown up valuable insights and
actions that we can take forward as a business.

Contents

I would like to thank all our employees, our
management team and the Board for their
outstanding commitment in helping us navigate
the Company through these challenging times.
Finally, I would like to give a special thanks
to Maria Moloney, who is standing down
after nine years as a Non-Executive Director.
Over this time, she has made a significant
contribution to the Board, particularly as
Chair of our Remuneration Committee.

We know from our current data and customer
engagement that confidence is returning
to the London SME community and they
are eager to get back to their offices which,
for the majority, play an important part in
fostering their culture and brand identities.
As we look past the pandemic, we anticipate
even greater demand for our flexible offer
from a wider range of businesses.

The Board and I are highly confident that
Workspace has the right strategy and the right
business model to capture that demand, recover
occupancy and income and deliver significant
value to shareholders over the long-term.

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Workspace Group PLC
Annual Report and Accounts 2021

INVESTMENT PROPOSITION

Delivering
long-term
value for
shareholders.

As we emerge
from the
pandemic and
London reopens
for business, there
are compelling
reasons to invest
in Workspace.

Contents

Leadership in
London’s flexible
office market
Following the pandemic, as businesses
return to offices, our product is
proving to be increasingly attractive
to a wider range of companies.

Our offer allows customers to reflect
their own identity and culture in their
office space, set within distinctive,
character buildings in the right locations
for their employees, while retaining
flexibility to expand and contract in line
with their business needs. This has been
our offer for more than 30 years giving
us a wealth of customer insight and
data to maintain a compelling offer.

Significant growth
opportunity

Our research shows that, despite our
leadership position, we currently only
have a 3% market share in London and
significant opportunity for growth. Our
scalable operating platform means
we can expand our portfolio without
greatly increasing operating costs.

We have an extensive project pipeline,
with plans to deliver 1.4 million sq. ft.
of new or upgraded space over the
next five years. On top of this, our
healthy balance sheet positions us
well to take advantage of acquisition
opportunities as and when they arise.

Our business model, see page 11

Our portfolio, see page 14

Sustainability

Sustainability has always been part of
Workspace’s DNA. As a long-term owner
of historic and character properties in
London, we are committed to playing our
part in mitigating climate change risk.

Our ongoing programme of upgrading
our centres and bringing new businesses
into the area, enables us to play a key
role in the employment-led regeneration
of communities across London.

Strong financial
position
We have prudently managed our balance
sheet. Despite the impact of Covid-19,
we are in a strong financial position.

We own our properties and operate
them to generate sustainable income.
We regularly invest to enhance our
business centres to drive both rental
and capital growth.

An experienced
team
Our management team combines a
wealth of experience at Workspace,
including those who have operated
through previous downturns, with recent
new appointments who bring fresh ideas
and expertise from other industries.

Our culture is dynamic and inclusive,
with a focus on customer experience
across the business.

Doing the Right Thing, see page 34

Business review, see page 71

Executive Committee, see page 132

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Workspace Group PLC
Annual Report and Accounts 2021

CHIEF EXECUTIVE OFFICER’S STATEMENT

Contents

Graham Clemett
Chief Executive Officer

Our results this year
reflect the impact of
the pandemic on our
customers. As restrictions
have eased, we have seen
customer demand pick
up materially, confirming
the appeal of our
distinctive buildings
and flexible offer.

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Workspace Group PLC
Annual Report and Accounts 2021

Contents

CHIEF EXECUTIVE OFFICER’S STATEMENT CONTINUED

We have a very clear
strategy. We believe
we can deliver
superior value for all
stakeholders through
a focus on customer-led
growth, operational
excellence and Doing
the Right Thing.

Trading profit after interest

£38.7m
17.75p

Final dividend per share

The past year has been one of the most
challenging in Workspace’s history; with
London effectively closed for much of it. This
is borne out in our results, which reflect the
impact of the pandemic on our customers.
On a more positive note, we have seen new
customer demand pick up materially and
footfall in our centres improve as Government
restrictions have eased, confirming the appeal
of our distinctive buildings and flexible offer.

Looking at the results for the year, net rental
income fell 33% to £81.5m, with £19.9m of rent
discounts and deferrals offered to customers,
and more significantly the net loss of around
10% of our customers. The decline in income
resulted in a 52% fall in trading profit after
interest, to £38.7m. This fall and the reduction
in the property valuation were the main
contributors to a pre-tax loss of £235.7m.

We decided at the half year to defer a decision
on the payment of the dividend as the UK was
entering another month of lockdown at that
time and there was heightened uncertainty.
However, the outcome of the year has been
robust and so, with our committed policy
to pay dividends on a covered basis out of
earnings, I am delighted to say that we are
now recommending a final dividend of 17.75p
per share.

We saw a 10% decrease in the underlying
property valuation to £2,324m, resulting in
a 14% decline in EPRA net tangible assets
per share to £9.38. The fall in the valuation
reflected the reduction we have seen in rental
values, with property yields stable. This fall in
rental values was no surprise given that we
have been pricing our lettings through the year
into a very thin market of demand.

The support we have given our customers at
the outset of the pandemic and the ongoing
interaction we have had with them to ensure
they have the right space for their business has
not gone unrewarded and we are delighted
that the majority of our customers stayed with
us through this year. Like-for-like occupancy
fell 11.7% to 81.6%, but we have seen that
stabilise now and expect a good recovery over
the coming year. Our support and focus on
customer engagement also stood us in good
stead for rent collection, which has been robust.

Pricing has fallen in line with the weaker levels
of customer demand through the year and we
expect it to remain subdued as we focus on
driving the recovery in occupancy. With our
flexible leases, however, pricing is extremely
dynamic and this allows us to capture reversion
more quickly than a traditional lease as market
demand improves.

operational and embodied carbon. A focus
on sustainability is not limited to development
and asset management; we also published a
green finance framework during the year and
successfully raised £300m through a green
bond to finance and refinance green projects.

The third pillar of our Doing the Right Thing
framework is looking after our people. They
are the true strength of this business, a fact
never more evident than in times of crisis. We
have a fantastic culture at Workspace and our
clear purpose and the values we adhere to
have ensured that we have all been working
toward a common goal. I’d like to thank all our
teams across Workspace, and our partners,
who have worked tirelessly both remotely and
in our centres to support customers during
this incredibly challenging year and keep the
business on an even keel as we emerge in good
shape out of the pandemic.

Despite the difficult environment we were
operating in, we continued to execute our
project pipeline during the year and, in fact,
opened two new business centres in the
summer of 2020. These continue to let up, with
Lock Studios in Bow particularly capturing
the imagination of businesses in that area.
It is a true showcase of the employment-led
regeneration element of our Doing the Right
Thing ESG strategy, as we have created a
vibrant hub for businesses in a community that
previously lacked quality commercial space.

Never before in our history has there been
such a spotlight shone on the office market as
businesses all over the world consider how to
use office space in the future. We are taking
this opportunity to promote the Workspace
offer as London reopens for business over
the coming months by launching a targeted
advertising campaign. We are highlighting
the benefits of working from Workspace, in
inspiring spaces in iconic locations where
businesses can create their own identity and
provide a home for their teams.

Creating sustainable environments and
mitigating the risk of climate change is
another strand of our Doing the Right Thing
commitments and this year, we published
our detailed pathway to becoming a net
zero carbon business by 2030. This includes
approved science-based targets and a
commitment to drive down emissions of both

Looking to the future, we have a very clear
strategy. We believe we can deliver superior
value for all stakeholders through a focus on
customer-led growth, operational excellence
and Doing the Right Thing. We are confident
in our product and see significant opportunity
to grow our business both organically and
through acquisitions.

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Workspace Group PLC
Annual Report and Accounts 2021

OUR BUSINESS MODEL

WHAT WE DO

Contents

We are the leading provider
of flexible office space in
London, providing inspiring
spaces to over 3,000
businesses and around
30,000 individuals.

Customer proposition

Unique portfolio

Operating platform

We provide SMEs with blank canvas
spaces within unique and inspiring
buildings in dynamic London locations.
Our customers build their own
identity and culture, but crucially our
flexible lease terms allow their space
requirements to evolve.

Our high-quality portfolio is wholly
London-based. We hold our properties
for long-term income generation and
our ownership model gives us the
flexibility to enhance the quality of
space and expand our footprint through
refurbishments and redevelopments.

We have a proprietary and sophisticated
in-house platform to manage our
interactions with customers. It provides
valuable data and insight to support
decision-making across the business.

HOW WE DELIVER VALUE

See page 12

See page 13

See page 15

We drive capital
appreciation and rental
growth from our expertise
in urban regeneration
in London, active asset
management and a focus
on customer experience.

STAKEHOLDERS
Successful, sustainable companies
understand the needs of their
stakeholders and the most effective
way to engage with them.

See page 20

Talented people

Prudent financing

Sustainability

Our employees are central to our success.
We are driven by a diverse, vibrant
and inclusive culture, which focuses on
customer experience. This dynamic culture
helps attract and retain people who align
with our values and have a broad range of
skills, experience and backgrounds.

We prudently manage our balance sheet
and maintain low levels of gearing. We
are focused on generating sustainable,
long-term income, which we then
reinvest in enhancing the portfolio and
return to shareholders via the dividend.

Creating attractive, sustainable
environments is integral to our business.
Successful regeneration of London
requires high-quality, energy-efficient
buildings and vibrant communities that
appeal to our customers, their employees
and to local residents and businesses.

See page 16

See page 18

See page 19

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Annual Report and Accounts 2021

OUR BUSINESS MODEL IN ACTION

Customer
proposition

A flexible offer tailored to customer needs
Our customers want a home for their business
and to create their own brand identity and
culture within their office space. Workspace
offers that flexibility, as well as flexible lease
terms which allow customers to expand and
contract in line with their business needs.

As businesses return to offices following the
pandemic, quality collaboration space has
become increasingly important. We dedicate
around 30% of our buildings to attractive,
well-designed communal and breakout space,
which also includes meeting rooms, showers,
cycle storage and high-quality cafés.

Clearly articulating our brand proposition
With the success of the Covid-19 vaccine
rollout and Government restrictions lifting,
demand for our space has increased. Our
flexible offer is proving attractive to a wider
range of businesses following the pandemic.
Our recently launched brand campaign
highlights our position as home to London’s
brightest businesses and aims to further
raise awareness of our offer and capture the
growing demand.

Building a customer-first culture
We are working hard to make ongoing
improvements to customer service and
encourage all our teams to focus on
customer retention.

A DIVERSE CUSTOMER BASE RANGING
FROM SMALL, EARLY STAGE BUSINESSES
TO LARGER, WELL-KNOWN BRANDS

E-commerce and retail head offices

Information, communication and technology
Professional, technical and consultancy services
Arts, entertainment and recreation
Marketing
Financial services
Less than 5%

13.2%
13.0%
12.1%
11.5%
8.4%
7.5%
34.3%

Freddie’s Flowers office at
Riverside in Wandsworth

Contents

CASE STUDY
Freddie’s
Flowers

Flower delivery business
Freddie’s Flowers has flourished
this year. Founded in 2014, today
the company has a £30.3m
turnover, with 150 staff and
110,000 customers.

We worked with Freddie to
provide him and his team with
the perfect space for their
business at Riverside Business
Centre in Wandsworth. This
includes a characterful walled
garden, a studio for filming and a
packing and delivery space, with
20% of all deliveries made by
electric bicycle. The company has
been certified as carbon neutral
this year.

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Workspace Group PLC
Annual Report and Accounts 2021

Contents

OUR BUSINESS MODEL IN ACTION CONTINUED

Unique
portfolio

Our freehold portfolio has been built up over
more than 30 years, with representation
across most areas of London. Owning the right
properties with the right configuration for
our multi-let strategy is critical. Our business
centres are typically characterful, relatively low
rise, large buildings of 50,000 sq. ft. or more.

Location is all-important and our properties
are well located around major transport hubs
and in vibrant neighbourhoods. Many of them
are distinctive landmarks in their areas. Inside,
the buildings are modern and well designed
to cater for the needs of our customers with
light-filled atriums, lots of communal and
breakout space, high-spec meeting rooms
and buzzing cafés.

Active asset management
We actively manage the portfolio to generate
value, driving rents on our like-for-like
properties, delivering on our project pipeline
or selectively acquiring and disposing of assets.

We have a long-term, sustainable approach
to asset management, complementing the
historic nature of many of our properties.
Freehold ownership allows us to quickly
respond to changing market demand
and to easily reconfigure our space. Our
rolling programme of refurbishments and
redevelopments allow us to keep the offer

EXTENSIVE PROJECT PIPELINE

Projects underway
Pall Mall Deposit
Mirror Works
Barley Mow
Chocolate Factory

H1 2021/22
H1 2021/22
2022/23
2022/23

up to date and to meet our increasingly strict
sustainability criteria. In turn, we benefit from
uplifts to the valuation as a result.

Climate change mitigation and resilience, see page 37

Growing the portfolio
Our ambition is to continue to grow the
portfolio through our project pipeline
and strategic acquisitions. We have deep
knowledge of the London property market
and sometimes track properties that would
suit our multi-let strategy for many years.
We take a disciplined approach driven by the
scale of our project pipeline and a rigorous
focus on returns.

1.4m sq. ft.

of new and upgraded space to be
delivered over the next five years

Lock Studios

CASE STUDY
Lock Studios

In June 2020, we launched
Lock Studios in Bow, located
next to a canal and the lively
Devons Road Market. The new
centre forms part of a mixed-use
redevelopment of our former light
industrial site. In addition to the
business centre, the regeneration
project has provided 557 flats, a
retail area and public open space.

The new 37,000 sq. ft. centre
includes 90 offices over six
floors, benefiting from high
ceilings and an industrial design.
It is a perfect example of our
employment-led regeneration
strategy, creating a lively centre
for businesses in a community
that previously lacked high
quality commercial space.

Lock Studios has really captured
the imagination of our target
customers, and has reached over
50% occupancy in less than a year.

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Annual Report and Accounts 2021

OUR BUSINESS MODEL
IN ACTION CONTINUED
UNIQUE PORTFOLIO CONTINUED

OUR PORTFOLIO
A scale portfolio in dynamic locations spread
across London.

WOOD GREEN

0
1
A

Contents

ZONE 3

HAMPSTEAD
HEATH

WOOD GREEN

HAMPSTEAD

0
1
A

HIGHBURY &
ISLINGTON

SHOREDITCH

STRATFORD

2021

2020
Workspace Group portfolio
CBRE property valuation £2,324m £2,574m
Number of locations
59
Lettable floorspace
(million sq. ft.)
Number of lettable units
Rent roll of occupied
units
Average rent per sq. ft.
Overall occupancy

£103.9m £132.8m
£39.18
87.0%

£33.90
77.8%

3.9
4,009

3.9
4,196

ZONE 2

LADBROKE
GROVE

A40
A40

NOTTING
HILL

ZONE 1

CAMDEN

REGENT’S
PARK

KING’S
KING’S
CROSS
CROSS

SOHO

A 4 0
A 4 0

PADDINGTON
PADDINGTON

HYDE PARK

HACKNEY

BETHNAL
GREEN

A 1

OLD
STREET

FARRINGDON

A 1

THE
CITY

LIVERPOOL
STREET

Like-for-like
Refurbishments
Redevelopments

SHEPHERD’S
BUSH

CHISWICK

HAMMERSMITH

WESTMINSTER

WATERLOO

LONDON
BRIDGE

BERMONDSEY

VAUXHALL

KENNINGTON

CANARY
WHARF

DEPTFORD

A 2

BATTERSEA
PARK

BATTERSEA

A 3

3
2
A

A205

WEST DULWICH

WEST
WEST
DULWICH
DULWICH

WANDSWORTH

A
A

RAYNES PARK

EARLSFIELD

RICHMOND
PARK

A
A

Like-for-like

Refurbishments

Redevelopments

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Contents

OUR BUSINESS MODEL IN ACTION CONTINUED

Operating
platform

£103.9m

Total rent roll at 31 March 2021

739

Average enquiries per month
in the year to 31 March 2021

Average lettings per month
in the year to 31 March 2021

Our proprietary, in-house marketing and
operating platform enables us to manage a
huge volume of customer activity in-house,
from enquiries and viewings through to
lettings, facilities management, billing
and renewals.

We have strong relationships with our
customers and ongoing interaction, as well
as our regular surveys, provides real-time
market intelligence. This data and insight drives
decision-making across the business and
ensures our product is constantly adapted in
line with customer needs.

The platform is scalable and means we can
significantly grow our portfolio without
incurring significant operating cost growth.

This platform is a major competitive strength,
built over many years with significant historic
data and insight on London’s SME market.
Dealing with considerable levels of customer
activity requires a particular culture and in-
house expertise and is part of what makes
Workspace unique.

CASE STUDY
Sales team

In early 2020, we created a
dedicated sales team to enhance
the sales and viewing process.

While the lockdowns significantly
impacted customer enquiries at
first, our sales team were able
to keep operating with social
distancing measures in place.
Since the start of 2021, the team
has delivered a steady weekly
increase in viewings, returning
to pre-pandemic levels by April.

Having a dedicated sales
team managing all viewings
enables our centre managers
to focus on delivering excellent
service and support to our
existing customers.

328

Average viewings per month
in the year to 31 March 2021

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Contents

OUR BUSINESS MODEL IN ACTION CONTINUED

Talented
people

We are proud of our diverse and skilled team.
We have a valuable blend of people with
long-term experience at Workspace and those
who have joined us more recently from other
industries bringing fresh ideas and expertise.

Operating during the pandemic
Our teams have worked tirelessly over the past
year to ensure customers have the right space
for their business, in terms of size, location and
affordability. Our centre managers and facilities
teams have kept our business centres open
and safe for those customers who needed
access throughout the pandemic and have
implemented measures to safely welcome
back customers.

Importance of culture
The past year has highlighted more than
ever how important company culture is for
businesses to operate successfully. Workspace
has a vibrant and inclusive culture that has
proved strong in a challenging year. With
teams working remotely for much of the
year, a common sense of purpose brought us
together and our values guided our actions
and decisions.

We also hear from our customers how
important company culture is to them and it is
clear that following the pandemic, successful
businesses will be those whose culture
prioritises employee wellbeing and satisfaction.
With customer service and our engagement
with customers front of mind, we recently
refreshed our brand proposition and market
positioning. As part of that, we rolled out
workshops for the entire business to educate
our employees on our brand personality and
tone of voice.

Employee wellbeing
Our first annual employee survey, conducted
last year, highlighted the importance of
wellbeing and over the year we have made
significant progress in this area. We have run
a series of wellbeing webinars for employees
and are launching a full programme of events
for the coming year.

Looking after our people, see page 45

CASE STUDY
Workspace
Winners

Following employee feedback
around recognising and
rewarding achievements
internally, we introduced
quarterly employee awards.

The Workspace Winners,
reinforce our positive
culture and recognise
excellence at both site
and head office level.

Employees nominate
colleagues who have
demonstrably lived our
values, and a judging panel
chooses four winners
per quarter.

Each winner is celebrated
with intranet case studies
outlining their positive impact
on the business, as well as
receiving a trophy, a £150
prize, and an all-expenses-
paid group dinner with the
CEO at the end of the year.

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OUR BUSINESS MODEL
IN ACTION CONTINUED
TALENTED PEOPLE CONTINUED

OUR VALUES

1. Know your stuff

We like people who are serious about
their subject; those who are open-minded,
interested and ask questions.

2. Show we care

We value great social skills and those
who instinctively build strong relationships.
We think hard about how to give back
to our communities.

3. Find a way

We look for those who are persistent
and have the confidence to move things
forward even when it is difficult. Flexibility
and adaptability are key, but so are focus
and determination.

4. Be a little crazy

We depend on the creativity and
imagination of all our people. We like
people who thrive on fresh thinking,
who are motivated by possibility.

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Contents

2020/21 SUMMARY

OUR BUSINESS MODEL IN ACTION CONTINUED

£81.5m

Net rental income

£38.7m

Trading profit after interest

£2,324m

Property valuation

£9.38

EPRA net tangible assets per share

24%

Loan to value

£434m

Cash and undrawn facilities

Prudent
financing

Our financial strategy is primarily focused
on generating sustainable income.

Since the global financial crisis, we have
prudently managed our balance sheet with a
mixture of bank debt and private placements.
More recently, we successfully raised £300m
via a green bond. We have a broad spread of
maturities and all our debt is unsecured. We
have significant headroom on our covenants,
low loan to value of 24% and, as at 31 March
2021, £434m of cash and available facilities to
pursue growth opportunities.

We own our properties for the long term and
invest in our programme of refurbishment and
redevelopments to drive rental growth and
enhance valuations. It is this combination of
income and capital value growth that makes
Workspace a compelling investment.

Owning our assets outright gives us control. We
are not constrained and can adapt the properties
and our offer to meet fast-changing customer
demands. Our efficient and scalable platform
enables us to grow the business over time
without significantly increasing operating costs.

We were delighted
by the strong level of
demand for our first
green bond issuance.

This demonstrates
that investors recognise
the resilience of our
business model and
the enduring appeal
of our unique offering.

Dave Benson
Chief Financial Officer

Dave Benson, CFO, at Workspace
head office

Business review, see page 71

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Contents

OUR BUSINESS MODEL IN ACTION CONTINUED

Sustainability

Workspace has played a key role in the
employment-led regeneration of areas across
London for over 30 years and we take this
responsibility seriously.

Many of our properties have historic
significance in their local area. From formerly
thriving factories to furniture depositories, our
business centres are often iconic landmarks in
their local communities. As the owner of these
important buildings, we strive to uphold their
legacy for the long term.

Creating attractive, sustainable environments
that positively contribute to local communities
closely aligns with the expectations of
our customers and investors, who are
increasingly concerned with the sustainability
of office space and reducing their impact on
the environment.

In addition to mitigating the risk of climate
change, as home to London’s brightest
businesses, Workspace aims to have a positive
impact on our local communities. Through
our InspiresMe programme, we work with
our customers to support disadvantaged
young people in London, offering CV
workshops, interview practice and work
experience placements.

SUSTAINABLE DEVELOPMENT GOALS

Our ESG strategy and targets are mapped
against the UN Sustainable Development Goals.

Commitment to net zero carbon by 2030
This year, we committed to becoming a net
zero carbon business by 2030 and published
our pathway to achieving this goal, in line with
our approved Science-Based Targets. These
are aligned with limiting global temperature
rise to 1.5°C above pre-industrial levels and
cover both operational and embodied carbon.

This will be a significant challenge due to
our older and often listed buildings. We take
a sustainable approach to refurbishment
projects, aiming to retain existing structures
and repurpose our buildings, saving on
embodied carbon. Thanks to our direct
relationships with customers, we are uniquely
placed to collaboratively drive down emissions
and our in-house facilities management team
allows for greater control over our operational
energy consumption.

Doing the Right Thing, see page 34

Mare Street Studios

CASE STUDY
Mare Street
Studios

We transformed a tired industrial
and commercial building to
provide new offices in Hackney.

The project was designed to
achieve an Excellent BREEAM
New Construction rating and
holds an EPC B rating. 95% of
the waste generated during the
refurbishment was diverted from
landfill and the building achieved
a 20% reduction in carbon
emissions compared to pre-
refurbishment levels.

The site offers 144 indoor
secure cycling bays and eight
showers. It has a 50m2 haybase
green roof, with over 20 floral
species in line with Hackney’s
wildlife recommendations, and
renewable energy is provided
via solar panels and air source
heat pumps.

95%

of the waste generated during
the refurbishment was diverted
from landfill

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OUR STAKEHOLDERS

Our stakeholders
are essential
partners in
our ongoing
success.

We recognise the
contribution that all our
stakeholders and partners
make to our business, and
we continue to work closely
with them.

To operate successfully, we
rely on open, transparent
and productive stakeholder
engagement. The Board and
management team work hard
to incorporate stakeholders’
views into our decision-
making process.

We engage with key
stakeholders on a regular
basis to identify strategic
actions. Our customer-facing
teams provide real-time
insight and data, as well as
regular feedback to keep our
offer attractive and fully up
to date.

Board activities

See page 111

Contents

Our customers

SIGNIFICANT TOPICS RAISED
– Flexibility of space and leases
– Ability to quickly expand or contract

office space

– Customisable space
– Covid safety measures, including social

distancing and hygiene provisions

– Financial support during the pandemic,
including rent discounts and deferrals
– Changing working patterns following

the pandemic

– Range of location choices
– Breakout areas and meeting rooms
– Customer service, personal not automated
– Sustainability of our buildings
– Super-fast, building-wide Wi-Fi
– Wellbeing and additional services

HOW WE ENGAGE
We have direct relationships with our
customers. A majority of customer enquiries
come through our website before being
passed to our in-house sales and lettings
team. Our centre managers foster close
relationships once customers have moved
in. We are focused on continually enhancing
customer service and this interaction
provides us with invaluable insights which
allows us to regularly adapt our offer to
customers’ evolving requirements. We also
collect scheduled feedback from our c.3,000
customers twice a year to improve our offer
and inform decisions on service provision,
building management and refurbishments
and acquisitions.

ACTIVITY IN THE YEAR
– Kept centres open throughout lockdowns
– Extensive safety and hygiene measures
– Company-wide customer service training
– Created new cycle storage spaces
– Delivered calendar of virtual events,

including the virtual Wellbeing Festival

– Created Back to Business hub on our
website including practical resources
– Delivered 205,000 sq. ft. of new and

upgraded space

– Customer journey mapping to identify

service improvement areas

– Invested in upgraded Wi-Fi technology
to accommodate growing demand for
services such as video conferencing
– Launched new customer newsletter,

The Works

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OUR STAKEHOLDERS CONTINUED

Q&A with the Executive Team

JOHN ROBSON
ASSET MANAGEMENT DIRECTOR

Contents

Q How has the asset management team
worked with customers to retain them
during this difficult year?

It has been more important than ever
this year to maintain a regular dialogue
with our customers to ensure that they
have the right space for their business.
This has been challenging with many of
them working remotely but the centre
managers and asset management team
have done an incredible job.

We have supported customers during

the year, through the 50% rent discount
in the first quarter or rent deferrals on
a case by case basis. On top of this, our
scale, different price points and flexible
model mean that we’ve been able
to move customers in line with their
business needs, with many contracting
and a few expanding.

I am pleased to say that thanks to this
support and our flexibility, the majority
of customers have stayed with us and
we know from having operated through
previous downturns that those who
downsized are likely to grow with us
once again as the economy picks up.

Thanks to the support
we gave and our
flexibility, the majority
of our customers have
stayed with us this year.

Q Will you be more focused on pricing
or occupancy as we head into the
next year?

A At the moment, our focus is absolutely

on recovering the occupancy we’ve lost
this year. Like-for-like occupancy was
down to 81.6% at 31 March 2021 and our
target is 90% plus. It will take time to
get there but with demand increasing
as lockdowns ease, we have already
seen occupancy stabilise.

It is still very much an occupiers’ market
and we won’t be pushing pricing any
time soon. Our pricing is very dynamic,
however, and as we see occupancy
recovering at particular sites and the
supply/demand balance shifting, we will
look to start delivering rental growth
once more.

John and his team are
responsible for new
lettings, retaining and
renewing customers and
the ongoing maintenance
and refurbishment of our
properties.

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OUR STAKEHOLDERS CONTINUED

Contents

Our people

Our investors

85%

of staff completed our
employee engagement survey

SIGNIFICANT TOPICS RAISED
– Job satisfaction
– Wellbeing and connection to colleagues

during lockdowns
– Pride in the Company
– Company culture and values
– Communications with staff
– Flexible working
– Empowerment to innovate
– Environmental and social sustainability
– Equal opportunities

292

institutional investors
engaged with during the year

SIGNIFICANT TOPICS RAISED
– Financial performance and impact of Covid
– Customer engagement and support
– Viability of strategy and business model
– Sustainability and climate change
– Employee wellbeing
– Balance sheet management
– Dividend policy
– Total Shareholder Return
– Corporate governance
– Social impact

HOW WE ENGAGE
Our positive company culture is based
on inclusive and mutual respect and
non-discrimination, and we always maintain
an open dialogue with our employees.

With many working remotely this year,
we developed a programme of frequent
business updates to employees from the
CEO. A series of town hall events allowed
the Executive Team to field questions via live
stream. We carry out an annual employee
survey to assess engagement and where we
can make improvements to the business. We
also circulated a special wellbeing survey in
the summer to gauge employee sentiment
following upheaval caused by the pandemic.

ACTIVITY IN THE YEAR
– Ensured all teams were equipped to work

remotely during lockdowns

– More regular communication from senior
management, including virtual updates
and Q&As

– Quarterly staff engagement sessions with

the Chairman
– Wellbeing survey
– New employee recognition awards linked

to the Company values

– Introduced Microsoft Teams as a new

communications tool

– Regular values videos and case studies

demonstrating culture in action

– Introduced popular staff wellbeing webinar

programme

HOW WE ENGAGE
We maintain an active dialogue with
shareholders through a rolling programme
of investor roadshows around our financial
results and corporate activity, as well as
conferences and industry events. In addition,
the CEO, CFO and investor relations team
have regular ad hoc meetings and calls
with existing and potential shareholders.
A monthly investor relations report keeps
the Executive Team and Board up to date
with significant investor developments
and ensures they are considered in our
decision-making.

ACTIVITY IN THE YEAR
– Regular engagement, heightened at the

start of the pandemic

– All results presentations, investor

roadshows and meetings held virtually

– Regular engagement with sell-side analysts
– Ad hoc investor calls and meetings
– Participation in virtual global investor

conferences

– Annual General Meeting held as a closed

meeting

– Developed a new investor website

with enhanced functionality to launch
post-year end

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OUR STAKEHOLDERS CONTINUED

Contents

Our partners & suppliers

Our communities

Procurement

Introduced ESG questions to the procurement
process for all suppliers

SIGNIFICANT TOPICS RAISED
– Creating green buildings
– Compliance with building regulations

and neighbourhood plans
– Access for all user groups
– Urban regeneration
– Recycling and waste practices
– Operating during the pandemic
– Social distancing on site

Workspace volunteers provided students with
virtual careers workshops or work experience

SIGNIFICANT TOPICS RAISED
– Fundraising during the pandemic
– How to support disadvantaged young

people during lockdowns

– Social challenges within different

London boroughs

– Employment inequality
– Addressing local questions and concerns

around building projects

HOW WE ENGAGE
We work with a wide range of valued and
long-term partners in Government, local
communities and building development. We
have a strong track record of refurbishment
and redevelopment in which good relations
with local government, communities
and contractors are an integral part.
Shared vision, integrity and a long-term
development pipeline are the basis of and
foundation for our supplier relationships to
achieve continued access to quality suppliers.

ACTIVITY IN THE YEAR
– Introduced ESG questions to the

procurement process for all suppliers

– Provided all on-site cafés with guidance on

how to be more sustainable

– Encouraged our supply chain to eliminate

the use of single-use plastics

– Promoted recycling and waste practices

HOW WE ENGAGE
Doing the Right Thing is an integral part of
our culture. We strongly believe that adding
something back to our communities is an
essential part of our corporate responsibility.
As a long-term owner of historic properties
across the city, we play a key role in the
employment-led regeneration of areas
all over London. As well as bringing
employment into emerging areas as we
launch new or refurbished properties, we
also go out into the local communities
to offer employment-focused support
to disadvantaged young people, such as
careers workshops and work experience.

ACTIVITY IN THE YEAR
– Held virtual careers workshops, including
interview practice, for disadvantaged
young people

– Donated £35,000 to Single Homeless

Project, our new charity partner
– Ran food bank collections at 23 of
our properties, particularly around
school holidays

– Hosted community consultation events

for local residents and businesses around
development projects

– Conducted a social impact review to

ensure our activity is targeted to those
in the community most in need

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OUR STAKEHOLDERS CONTINUED

The environment

HOW WE ENGAGE
We are committed to reducing the
environmental impact of our properties and
their related supply chains. Sustainability and
climate change are becoming increasingly
important to all our stakeholders. Our
dedicated sustainability team are focused on
managing our carbon footprint and reducing
our impact on the environment. We adhere
to industry standards in sustainability and
responsible building and have a strong
track record in driving improvements. We
acknowledge there is a climate emergency
and recognise that our industry significantly
contributes to the global carbon footprint.
We have therefore committed to becoming
a net zero carbon business by 2030.

2030

Committed to become
a net zero carbon
business by 2030

SIGNIFICANT TOPICS
– Becoming a net zero carbon business
– Measuring and monitoring air and energy

pollution measures

– Creating energy-efficient buildings
– Green finance
– Green building projects
– Sustainable transport
– Reporting of climate-related risks and

opportunities through TCFD framework

ACTIVITY IN THE YEAR
– Committed to becoming a net zero

carbon business by 2030 and published
our pathway to achieve that goal
– Approved science-based targets,

aligned to limit global warming to 1.5°C
– Set up a Green Finance Committee and
published Green Finance Framework

– Issued first green corporate bond,

raising £300m to finance or refinance
green projects

– Achieved recycling rate of 73%

Clerkenwell Workshops

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OUR STAKEHOLDERS CONTINUED

Q&A with the Executive Team

DAVE BENSON
CHIEF FINANCIAL OFFICER

Contents

Q What have you learnt about
Workspace in your first year
in the business?

It’s certainly been a challenging first
year in the job but if anything, our
response to the global pandemic and
performance this year has shown me
how resilient this business is, with a very
robust model.

The difficulties of the year have really
highlighted the culture at Workspace as
well, which has been maintained despite
many teams having to operate remotely
for much of the year. There is a drive to
get things done and seek out innovative
solutions to support each other and our
customers that has proved invaluable
during the year.

I have been impressed by the deep
expertise of Workspace people and
the knowledge within the business
that goes back years. The experience
of previous economic downturns has
proven vital as we have navigated
through this year and I feel confident
will continue to serve us extremely well
in the future.

Our response to the
global pandemic and
performance this year
has shown me how
resilient this business is.

Q What are your priorities for the

balance sheet going into next year?

I inherited a very robust balance sheet
and we have worked hard this year
to further strengthen it in order to
best position the business to emerge
strongly from the pandemic.

After a relatively quiet year in terms of
project activity, we will be progressing
our project pipeline this coming year
with several schemes underway.

With the green bond issued and

successful refinancing completed, we
are also well placed to take advantage
of acquisition opportunities that arise
over the course of the year.

Dave was appointed CFO
in 2020. He oversees the
finance and technology
teams and is responsible
for protecting and
investing our capital.

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OUR RESPONSE TO MARKET TRENDS

We are confident in our
focus on the London
market. We evolve our
flexible offer to respond
to changing market
trends and customer
requirements.

Business review

See page 71

Our strategy

See page 29

Contents

1. The UK economy
continues to feel
the lasting impact
of the pandemic

GDP declined by 9.9% in 2020, the steepest
drop since consistent records began in 19481.
From many businesses forced to shut down
due to restrictions on public movement, the
economic impact has been widespread.

The cycle of lockdowns and easing of
restrictions meant that many businesses
continue to face challenges, with one in seven
UK businesses at risk of imminent closure2. The
Government expects 2.2 million people to be
unemployed by the end of the year3.

What this means to Workspace
During the first three months of the crisis, we
chose to share the burden of the pandemic
with customers by offering deferrals and an
absolute 50% rent reduction. Since then, we
have worked closely with customers to provide
support and offer flexibility as best we can on
an individual basis. This includes ensuring they
have the right space for their business and at
the right price point.

While like-for-like occupancy fell by 11.7% in
2020/21, we are now seeing strong signs of
recovery with well over 1,000 enquiries in
March 2021 and occupancy stabilising.

Our strong balance sheet has allowed us to
weather the turbulent market conditions and
come out of the crisis well positioned thanks
to our distinctive flexible offer and freehold
ownership model.

1,172

enquiries in March 2021

1. Coronavirus: Economic Impact, House of Commons

briefing paper, February 2021

2. Covid-19 Analysis Series, Centre for Economic

Performance, January 2021

3. Office for Budget Responsibility, March 2021

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OUR RESPONSE TO MARKET TRENDS CONTINUED

2. Many are reappraising
the role of the office
following a year of
working remotely

3. Flexibility has

become even more
important in the
wake of the
pandemic

In the first lockdown, companies were
abruptly forced to embrace home working,
almost overnight.

Many made the move so seamlessly that
commentators questioned the need for the
office altogether, coupled with the time spent
by Londoners commuting each day. However,
a year later, many people have found they
miss the collaboration, ad hoc interactions
with colleagues, infrastructure and mentorship
associated with a physical office.

Reports have emerged on the detrimental
effects of extended periods at home: working
days are longer by 49 minutes1, with more
meetings to attend and emails to answer.
Loneliness and sedentary working have taken a
toll on employees’ physical and mental health1.

What this means to Workspace
Our customer base had already embraced
flexible working prior to the pandemic.
Working from home is likely to remain a
supplement to, rather than substitute for,

the office, with customers favouring greater
flexibility and choice.

The nationwide lockdowns have highlighted
the importance of collaboration and
connection. Our customers value the power of
their office to help shape a dynamic company
culture and brand identity.

We know that if customers are to attract and
retain talent, their office environment must
compete with people’s homes for comfort and
convenience. Ownership of our buildings gives
us complete control over customer experience,
with the ability to continually evolve our product.

26%

of employees in the UK plan to continue
to work from home permanently or
occasionally after lockdown2

1. Collaborating during Coronavirus, National Bureau of

Economic Research, July 2020
2. Working From Home, Finder, 2021

While demand in 2020 for flexible office space
dipped to 52% of pre-Covid levels1, interest is
now returning strongly.

Flexibility remains the top priority for occupiers
looking for space; ongoing uncertainty caused
by the pandemic has prompted a greater
number to consider the benefits of short-term
leases and flexible space.

What this means to Workspace
We currently let space to 3% of the estimated
100,000 SMEs that we’ve identified in our
target market in London. We see significant
long-term opportunity to increase our market
share.

Our scale and truly flexible offer, developed
over 30 years, coupled with our ownership
model and strong customer service,
differentiate us from more recent entrants to
the flexible office space market and those who
operate a leasehold rather than freehold model.

To us, flexibility means more than just flexible
lease terms. We know that customers value
the fact they can personalise and brand their
space, as well as the capability to easily scale
up or down, or move elsewhere in our portfolio,
another linchpin of our offer.

This year we launched a revitalised brand
proposition to clearly position Workspace in the
market. We are emphasising office space on
the customer’s terms, aligned with our purpose:
to give businesses the freedom to grow.

market share for Workspace with
significant opportunity to grow

1. UK Flex Market Review, 2020, Instant Group

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Contents

OUR RESPONSE TO MARKET TRENDS CONTINUED

4. Employee health and

wellbeing are at the front
of employers’ minds

5. Landlords and

customers must work
together to meet net
zero carbon targets

42%

reduction in Workspace’s absolute
Scope 1 greenhouse gas emissions
by 2030

100%

renewable electricity sourced
by Workspace

The built environment contributes around 40%
of the UK’s total carbon footprint1.

Increasingly eco-conscious customers prefer
to take space in buildings with WELL and
green features, and favour landlords who
seek to reduce their environmental impact.
The Government announced its target to
meet net zero carbon emissions by 2050,
which was matched by the industry’s
Better Buildings Partnerships’ (‘BBP’)
Climate Change Commitment.

What this means to Workspace
This year we brought forward our target to
become a net zero carbon business to 2030.
We published our pathway explaining how
we plan to reduce our emissions across our
operations and supply chain in line with our
approved Science Based Targets. Many of
our buildings are older and some listed, and
therefore need to be carefully retrofitted
without altering their appearance or character.
We directly manage our buildings and foster
close relationships with our customers, giving
us a unique opportunity to collaboratively drive
down emissions, whilst our in-house facilities
management team gives us greater control
over our operational energy consumption.

We are targeting a 42% reduction in Scope 1
greenhouse gases, and installing solar
panels for all new developments and major
refurbishments where possible, as well as
on several existing buildings. We will continue
to source 100% renewable electricity and
adopt a carbon offsetting approach for the
remaining emissions.

This year, we also issued a £300m green bond
to finance and refinance green projects.

The turmoil of the last year and uncertain job
security, financial hardship and a lack of social
contact have led to increased stress across the
working population.

As restrictions ease, teams are returning
to the office in search of social interaction,
collaboration and better mental health.
Employers must provide reassurance that
the environment will be safe.

What this means to Workspace
Our business centres are characteristically low-
rise, with spacious receptions and breakout
areas, that rarely require lifts. We work with
architects to design environments that support

76%

of people believe their employer
should be doing more to protect
their mental health1

wellbeing and help prevent poor health.
Windows are sized and floorplans designed to
flood the buildings with light, and a range of
quiet and breakout areas across multiple floors
deter sedentary working. Our broad spread of
locations also encourages cycling to work and
many of our customers are local with no need
to take public transport.

Throughout the last year, we ran a series of
popular wellbeing webinars for customers,
offering tips and insights on how to implement
wellbeing initiatives and create a positive
company culture remotely.

Since the beginning of the pandemic, we have
introduced extensive measures at our business
centres to protect staff and customers from
Covid-19, including enhanced cleaning regimes,
screens, social distancing markings and one-
way systems, as well as providing FAQs and
other practical resources for customers on
our website.

1. Oracle and Workplace Intelligence Report, 2020

1. UKGBC website, 2021

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OUR STRATEGY

Creating value for
our customers, our
shareholders and
our communities.

Our purpose
Our purpose is to give businesses the
freedom to grow because we believe
that in the right space, teams can
achieve more. Now more than ever we
are able to offer the right space and
support for customers by creating the
communities and environments their
teams need to thrive.

We have rearticulated our strategy
The fundamental objective of our
strategy remains consistent: to nurture
employment-led regeneration of London
through inspiring, flexible work space.
Our strategy to achieve this has evolved
to focus on our unparalleled customer
offer, strong operational leadership and
driving forward our ESG agenda.

Contents

Driving
customer-led
growth…

…on a foundation
of operational
excellence…

…whilst always
Doing the Right
Thing

Cement our position as home to London’s
brightest businesses
– Reinforcing our differentiated customer

proposition to capture demand and grow
market share

– Raising our profile amongst target

customers and stakeholders

Continually enhance customer experience
– Ongoing improvement of our flexible

offer and service to retain customers and
drive occupancy

– Focus on customer service, with centre
teams creating vibrant communities

Leading in London’s flexible office market
– Growing our portfolio of historic and

character properties in the right locations

Active portfolio management
– Rolling pipeline of refurbishment and
redevelopment projects driving value
– Deep knowledge of the London market
underpins strategic acquisitions and
disposals

Efficient, scalable operating platform
– In-house capability and expertise drives

income growth

– Focus on innovation and technology
– Ability to scale without significant cost

growth

Prudent financing and strict investment
criteria
– Strong balance sheet
– Focus on returns

Driving employment-led regeneration
– Historic buildings repositioned to bring

employment and trade to up-and-
coming areas

– Supporting local communities and young

people through inspiring events and
work experience

Creating sustainable environments
– Sustainability at the heart of

development planning

– Committed to becoming a net zero

carbon business by 2030

Maintaining an empowered, diverse
workforce connected to their
communities
– Values-driven behaviour – ‘Show we care’

is an integral part of our culture

– Focus on employee wellbeing and talent

development

RELEVANT PRINCIPAL RISKS
AND UNCERTAINTIES

1, 7, 5

RELEVANT KPIS

Financial: 1, 5, 6
Operational: 1, 2, 3,
4, 5

RELEVANT PRINCIPAL RISKS
AND UNCERTAINTIES

2, 3, 4, 7

RELEVANT KPIS

Financial: 2, 3, 4, 7,
8, 9
Operational: 1, 2, 3,
4, 5

RELEVANT PRINCIPAL RISKS
AND UNCERTAINTIES

3, 7, 8

RELEVANT KPIS

Financial: 7, 8
Operational: 6

See page 30

See page 31

See page 32

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OUR STRATEGIC PROGRESS

Driving customer-led
growth…

CEMENT OUR POSITION
AS HOME TO LONDON’S
BRIGHTEST BUSINESSES

20/21 achievements
– Launched a new, more intuitive

consumer website to grow
direct web enquiries and drive
organic search

– Delivered an enhanced broker
engagement strategy to drive
additional enquiries and lettings

– Prepared a brand campaign
to raise awareness of our
differentiated brand proposition
with digital and out of home
advertising planned to coincide
with the lifting of Government
restrictions

21/22 aims
– Launch brand campaign to
capture demand and drive
brand awareness

– Make significant progress in

recovering occupancy

CONTINUALLY ENHANCE
CUSTOMER EXPERIENCE

LEADING IN LONDON’S
FLEXIBLE OFFICE MARKET

20/21 achievements
– Supported our customers as they
faced the effects of the pandemic
by offering a 50% discount in Q1
– Implemented significant hygiene
and social distancing measures
to allow us to safely welcome
customers back to our centres

– Rolled out tone of voice

workshops across the business in
line with new brand positioning

21/22 aims
– Improve capture of feedback
to respond more quickly and
increase level of customer service

20/21 achievements
– Launched two new business

centres: Mare Street Studios in
Hackney and Lock Studios in Bow

– Used the lockdown periods with
fewer customers in centres to
upgrade front of house areas,
creating more collaboration
space which will be increasingly
in demand when customers return

21/22 aims
– Let up space at newly launched

centres and launch new space at
Pall Mall Deposit and new centre,
Mirror Works

– Launch trial of MyWorkspace

– Take advantage of acquisition

mobile app at Kennington Park
– Continue tone of voice training

to ensure consistency of
communication with customers

opportunities to grow the portfolio
and deliver shareholder value

Contents

Wild Cosmetics, based at
China Works

CASE STUDY
Wild

Eco-friendly cosmetics start-up,
Wild, launched just two years
ago, creating the UK’s first
refillable plastic-free deodorant.
Wild’s vision to eliminate single-
use plastics and unnecessary
chemicals in the bathroom has
set the company on a rapid
growth trajectory.

The natural deodorant company
moved into a four-person office
at China Works in Vauxhall in
the summer of 2019, valuing
the flexibility that allowed them
to expand quickly. Within a
year they doubled to a team of
eight and moved into a larger
space. The company received
£2m in seed funding in 2020,
which they are using to grow the
brand and invest in their team
and technology.

Since then, Wild has again
doubled in size to a team of
15, and in May 2021 took on
a new, larger space at China
Works, which includes their
own expansive kitchen, meeting
rooms and breakout areas.

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OUR STRATEGIC PROGRESS CONTINUED

…on a foundation
of operational
excellence…

ACTIVE PORTFOLIO
MANAGEMENT

EFFICIENT, SCALABLE
OPERATING PLATFORM

PRUDENT FINANCING AND
STRICT INVESTMENT CRITERIA

20/21 achievements
– Ensured customers have the right
space, enabling them to expand
or contract in line with their
business needs

– Continued to generate enquiries

and manage viewings and
lettings despite very challenging
operating environment

21/22 aims
– Complete trial and launch
customer app to improve
engagement and enhance
customer experience

20/21 achievements
– Strengthened the balance sheet

with the issuance of Workspace’s
first green bond, raising £300m
of debt, extending our maturities
and reducing cost of debt
– Maintained low LTV of 24%

21/22 aims
– Deploy green bond proceeds
– Increased liquidity gives

us significant firepower to
progress our refurbishment and
redevelopment pipeline and
pursue acquisition opportunities

20/21 achievements
– Continued to execute our

project pipeline, with ongoing
refurbishments at Parkhall
Business Centre, Pall Mall
Deposit, Westbourne Studios and
Barley Mow Centre

– Obtained planning consent for
Riverside, a major mixed-use
redevelopment in Wandsworth
to deliver a new 104,000 sq.
ft. business centre and 65,000
sq. ft. of new light industrial
space, as well as 402 residential
apartments

21/22 aims
– Obtain planning consents for
Morie Street and Havelock
Terrace

– Progress refurbishments of Leroy
House and The Biscuit Factory
– Sale of residential components at
Riverside and Highway Business
Park

Contents

CASE STUDY
£300m green
bond issuance

Sustainability has long been
at the heart of what we do at
Workspace, with our focus on
employment-led regeneration
of parts of London. As we
considered our refinancing
plans this year, it was therefore
a natural step to look at
green finance.

We issued our first green bond,
and indeed our first public
bond, in March 2021, raising
£300m to finance and refinance
eligible green projects. We had
significant interest from fixed
income investors and the bond
was oversubscribed.

The successful issuance has
further strengthened the balance
sheet, extending our maturities
and reducing cost of debt,
while also aligning our financing
strategy with our broader
sustainability goals.

£300m

green bond

Green Finance Framework,
page 42

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OUR STRATEGIC PROGRESS CONTINUED

…whilst always Doing
the Right Thing

DRIVING EMPLOYMENT-LED
REGENERATION

CREATING SUSTAINABLE
ENVIRONMENTS

MAINTAINING AN
EMPOWERED, DIVERSE
WORKFORCE CONNECTED
TO THEIR COMMUNITIES

20/21 achievements
– Letting up Brickfields and Lock
Studios, which are fantastic
destinations for small businesses
in the emerging areas of Hoxton
and Bow

20/21 achievements
– Committed to becoming a net
zero carbon business by 2030
and published our pathway to
achieve that goal in line with our
Science-Based Targets

– 38 Workspace volunteers took

– Reduced absolute Scope 1 &

20/21 achievements
– Formed an ESG Committee to

oversee management of the risks
and opportunities associated
with climate change and provide
strategic direction for our social
and governance activities

part in virtual CV workshops and
interview practice sessions for
disadvantaged young Londoners
– Conducted a review of our social

Scope 2 GHG emissions by 28%
from our baseline year of 2012/13,
ahead of our target reduction
of 16%

– Conducted an employee survey

and held regular town hall events
to keep employees connected
during lockdowns

Contents

CASE STUDY
Sustainable
transport

This year, we have installed
97 new cycle racks and
14 showering facilities to
encourage customers to
choose a sustainable and
Covid-safe commute into
the workplace.

We have installed 5 new
Electric Vehicle (EV) charging
points at Kennington Park
and following their success,
we now have plans to roll this
out across other sites.

This year we also
reintroduced the cycle
to work scheme for all
Workspace employees.

impact work

21/22 aims
– Scale up InspiresMe programme

to provide inspiration, knowledge,
support and experience to
those in our communities
at the greatest risk of NEET
(Not in Education, Employment
or Training)

– Installed 97 new cycle storage

spaces and 14 showering
facilities, as well as launching a
trial of Electric Vehicle charging
points to encourage use of green
transport

– In partnership with Workspace
customers, hosted a series of
virtual wellbeing events and
festivals for customers and
employees, with over 1,000
attendees across 26 sessions

21/22 aims
– Install solar PV systems at

additional properties

– Deliver development projects

in line with our net zero carbon
ambitions

– Develop comprehensive climate
change resilience strategy for
the portfolio

21/22 aims
– Launch new employee benefit,
Health Shield, with a range of
health and wellbeing solutions
– Offer employee volunteering

opportunities with new charity
partner, Single Homeless Project

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OUR STRATEGIC PROGRESS CONTINUED

Q&A with the Executive Team

ANGUS BOAG
DEVELOPMENT DIRECTOR

Contents

Q What happened to the refurbishment
and redevelopment projects during
the pandemic?

In line with Government guidelines, we
were able carry on with all the projects
we had on site, albeit with strict social
distancing and increased hygiene
measures in place.

We had just completed two major new
projects at the start of the pandemic
and were fortunate that we did not have
any major projects due to begin during
the year so it was a relatively capex-
light year in terms of our pipeline.

We are now full steam ahead with

several projects underway currently
and I am particularly excited about the
imminent opening of Pall Mall Deposit
in West London, which is a beautiful
old furniture depository that we’ve
refurbished, creating 59,000 sq. ft.
of new and upgraded space, and the
launch later in the year of Mirror Works
in Stratford, a brand new building in an
exciting part of London.

All new buildings are
being designed as
BREEAM Excellent.

Q How are you ensuring your buildings

meet the ever increasing ESG
requirements?

A We were already one step ahead with
our target that all new buildings be
designed as BREEAM excellent.

Our energy usage is already lower

than many other fully air conditioned
buildings. We have a rolling programme
of replacing gas boilers with ground or
air source heat pumps and we source
100% renewable electricity.

As well as working with customers to
reduce operational carbon emissions,
we also aim to drive down embodied
carbon, in line with our strategy to
repurpose and recycle old, character
buildings rather than always build
new properties.

With responsibility for all
our refurbishment and
redevelopment projects,
Angus is focused on
creating sustainable
environments for
our customers.

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Contents

DOING THE RIGHT THING

Overview

We are
delivering on
our commitment
to become a net
zero carbon
business by
2030 and drive
employment-led
regeneration
across London.

Graham Clemett
CEO

Approach

Leadership oversight

Driving forward our Environmental, Social and
Governance (‘ESG’) agenda is a top priority
for Workspace. ESG has become increasingly
important to our stakeholders, particularly
customers, investors and employees. In order
to attract London’s brightest businesses, we
aim to exceed their ESG expectations and
ensure our service can provide them with the
tools to manage their own environmental and
social impact.

To achieve this, ESG considerations are
embedded in all stages of our properties’
lifecycle and business-wide strategic decisions.
Our ESG strategy covers development
practices, operational emissions and our social
impact. It enables us to operate responsibly
in our dealings with all stakeholders and
reinforces our commitment to the sustainable
long-term growth of our business and to the
employment-led regeneration of London. We
have mapped our strategy against the UN
Sustainable Development Goals (‘SDGs’) to
ensure our objectives and targets are aligned
with global ambitions.

The highest level of responsibility for our ESG
strategy, accountability and performance
lies with the Board of Directors and our Chief
Executive Officer. The Board is aware of the
risks and opportunities associated with ESG
and is supportive of the ambitious objectives
and targets that have been set.

“We acknowledge there is a climate

emergency and recognise that the building
and construction industry significantly
contributes to the global carbon footprint.
This is why we want to play our part in
Building Back Better and transition to
a green economy, by becoming a net
zero carbon business by 2030. First and
foremost, we are focusing our efforts on
driving down our operational and embodied
carbon emissions in line with our approved
science-based targets, aligned to limit
global warming to 1.5°C.”

Graham Clemett
CEO

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DOING THE RIGHT THING
CONTINUED
OVERVIEW CONTINUED

ESG ratings and
memberships:

Contents

ESG ratings:

Memberships:

Materiality

Our ESG strategy is based around the key
material issues that are most relevant to our
business and value chain. These issues are
addressed within the three key themes of
our Doing the Right Thing framework (see
overleaf) to ensure that we are creating value
for all stakeholders.

This year we appointed a social impact
consultancy to review our social issues
in more detail and advise us on how we
can measurably improve our impact. The
study involved a stakeholder analysis and
engagement, including interviews with a
variety of stakeholders and a detailed review
of the social challenges in the boroughs where
we operate. The outcomes of the study were
insightful, and are detailed on page 54.

Our five key material issues are:
– Climate change
– Resource efficiency
– Human rights
– Stakeholder engagement
– Community engagement

and supplier
engagement leader

Real Estate
Assessment Score

Development
Assessment Score

Public Disclosure Score

Gold

EPRA Sustainability
Best Practice
Recommendations Award

3.6

absolute rating out of 5

89%

relative percentile score

Foundation

Foundation Level
Accreditation

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DOING THE RIGHT THING CONTINUED
OVERVIEW CONTINUED

Doing the Right Thing framework

Contents

Key themes:

Areas of focus:

SDGs:

1. Climate change
mitigation and
resilience

See page 37

– Net zero carbon by 2030
– Reduce GHG emissions in line with our SBTs
– Continue to improve climate-related financial

risks and opportunities reporting using the TCFD
framework

– Set up a Green Finance Committee
– Maximise on-site renewable energy generation
– Reduce waste generation and reach recycling

target of 76%

– Provide sustainable transport facilities
– Engage with supply chain and customers

2. Looking after
our people

– London Living Wage compliant by April 2022 for all

– Annual employee survey and town hall Q&A

employees and contractors

sessions

– Environmental and social objectives for all

– Incorporate wellbeing into our Charity & Social

employees

Committee to organise events throughout the year

– Ethical/environmental fund option offered in

– Introduce Health Shield employee benefit

addition to default pension fund

programme

– Gain a better understanding of the ESG goals and

performance of our supplier base

– Refresh recruitment policy
– Deliver enhanced induction programme for new

See page 45

– Improve Equality, Diversity and Inclusion data

joiners

collection and analysis

3. Inspiring the next
generation and
supporting our
communities

– Scale up our InspiresMe youth programme
– Utilise our customer and supplier network to

expand our InspiresMe youth programme to reach
more young people

– Conduct a social value measurement exercise for
our social and community activity and regularly
report against it

– Roll out Social Impact Policy and Management

– Continue career and interview workshops for

Framework

young people in the parts of London where we
operate

– Host inspirational talks at our centres, creating a

See page 51

vibrant hub for the community

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DOING THE RIGHT THING CONTINUED

Climate change
mitigation and
resilience

Climate change mitigation is a
cornerstone of our ESG strategy. In
recent years, we have made significant
progress, notably with a 28% decrease
in greenhouse gas emissions in 2019/20,
compared to our original 2012/13
baseline. We are now taking our climate
ambitions one step further, with our net
zero carbon strategy.

Our carbon footprint

Net zero carbon pathway

Green Finance Framework

page 38

page 40

page 42

Contents

Targeting net
zero carbon
by 2030

To reach our goal to become
a net zero carbon business
by 2030, we are reducing
our emissions across our
operations and value chain
in line with our approved
science-based targets, which
are in turn aligned with
limiting global temperature
rise to 1.5°C above pre-
industrial levels.

See page 40

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DOING THE RIGHT THING CONTINUED
CLIMATE CHANGE MITIGATION AND RESILIENCE CONTINUED

Our carbon
footprint

Before getting into the details, it is important
to first understand our carbon footprint.
To illustrate this, we have used our 2020/21
carbon emissions, which totalled 44,246
tonnes of carbon (equivalent to the annual
energy usage of 10,923 average UK
households), and have split the emissions up
into our business and value chain activities.

The GHG Protocol Corporate Standard
classifies a company’s GHG emissions into
three ‘scopes’:

SCOPE 1

SCOPE 2

SCOPE 3

Net zero carbon pathway, see page 40

Scope 1 emissions are direct emissions from
owned or controlled sources. Our Scope 1
emissions are essentially our gas and fugitive
emissions (refrigerants for air conditioning).

Scope 2 emissions are indirect emissions
from the generation of purchased energy, i.e.
our electricity consumption. Scope 2 can be
reported as location-based or market-based.
A location-based method reflects the average
emissions intensity of the grid whereas a
market-based method reflects emissions from
electricity purchased from a supplier, allowing
zero emissions to be reported for contracts on
a renewable energy tariff. Our Scope 2 market-
based emissions are zero because we procure
100% renewable electricity, and our Scope 2
location-based emissions are 4,719tCO2e.
To be fully transparent, we have used our
location-based emissions in the chart (right).

Scope 3 emissions are all indirect emissions
(not included in Scope 2) that occur in the
value chain, including both upstream and
downstream emissions. The majority of our
Scope 3 emissions are from the embodied
carbon associated with our refurbishment
and redevelopment activities. 3.5% of our
total emissions are from ‘purchased goods
and services’ which includes maintenance,
service charge recoverable items and minor
capex items. Some of our customers’ energy
falls under our Scope 3 emissions where they
procure their energy directly from the supplier.

Contents

2,887

Natural gas
Fugitive emissions
Vehicle emissions

4,719

2,028
857
2

Electricity (location based)
Purchased heat (location based)
Electricity (market based)

4,568
151
0

36,640

Embodied carbon in development
projects
Customers’ direct energy
procurement
Purchased goods and services
Purchased electricity transmission
& distribution
Water treatment
Employee commuting
Water supply
Waste management
Heat transmission & distribution
Business travel

32,307

2,053
1,529

393
126
121
61
41
8
0

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Contents

DOING THE RIGHT THING CONTINUED
CLIMATE CHANGE MITIGATION AND RESILIENCE CONTINUED

OUR CARBON FOOTPRINT CONTINUED

LOCATION-BASED SCOPE 1, 2 AND 3 GHG EMISSIONS

Our Scope 1 and 2 emissions make up only
17% of the total emissions, and although these
look insignificant compared to our Scope 3
emissions, they are essentially our operational
emissions that we have control over and
therefore take full responsibility for. The majority
of Scope 3 emissions are associated with our
refurbishment and redevelopment activities.

SCOPE 1

2,887

SCOPE 2

4,719

SCOPE 3

36,640

Natural gas

Fugitive emissions

Electricity
(location-based)

Embodied carbon in
development projects

Purchased goods
and services

Customers’ direct
energy procurement

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Contents

DOING THE RIGHT THING CONTINUED
CLIMATE CHANGE MITIGATION AND RESILIENCE CONTINUED

Net zero carbon
pathway by 2030

In September 2019, Workspace signed up to
the Better Buildings Partnership (‘BBP’) Climate
Change Commitment to deliver net zero carbon
real estate portfolios by 2050. Since then we have
carried out a review of our business and value chain
emissions and have brought this forward to 2030.

This will be a significant challenge, particularly
given that many of our buildings are older, with
some listed, and therefore need to be carefully
retrofitted without altering their appearance or
character. Wherever possible, we aim to retain the
existing structures and repurpose our buildings,
transforming them into modern spaces, whilst
saving on embodied carbon.

We directly manage our buildings and foster
close relationships with our customers, giving
us a unique opportunity to collaboratively drive
down emissions, whilst our in-house facilities
management team gives us greater control over
our operational energy consumption. We will
increasingly be supporting and engaging with all
of our stakeholders to deliver this commitment
and look forward to sharing our progress.

To help us achieve our net zero carbon goal, we
have developed science-based targets (‘SBTs’)
which are aligned with the Intergovernmental
Panel on Climate Change (‘IPCC’) 1.5°C report.
These targets have been approved by the science-
based targets initiative (‘SBTi’) and cover both our
operational and embodied carbon emissions.

The full net zero carbon pathway can be found on
www.workspace.co.uk/investors/doing-the-
right-thing

OPERATIONAL CARBON
(ENERGY, WATER AND WASTE)

EMBODIED CARBON

RENEWABLES PROCUREMENT

SCIENCE-BASED TARGETS

-42%

Reduce absolute Scope 1
GHG emissions 42%
by 2030 from a 2020
base year

-20%

Reduce Scope 3 GHG
from capital goods 20%
per sq. ft. of net lettable
area by 2030 from a 2020
base year

100%

Continue annually
sourcing 100%
renewable electricity
through to 2030

– All new developments and major

– Procure green gas upon next contract

refurbishments to have electric heating
and cooling systems

refurbishments to have an embodied
carbon assessment

– Retrofit existing assets with electric

heating and cooling systems

– Take embodied carbon into account
when making development decisions

– Reduce heating demand by improving

– Set specific embodied carbon

reduction targets for new
developments and major
refurbishments

– Reduce the embodied carbon of
development projects (using low
carbon materials)

wall and ceiling insulation

– Reduce performance gap between
design and in-use by following Soft
Landings or NABERS Design for
Performance Framework

– Look to obtain asset level energy

efficiency ratings such as BREEAM
in-use or NABERS UK

– Accelerate energy efficiency upgrades

including LED/PIR lighting, BMS
optimisation

– Improve energy monitoring and

controls

– Customer engagement to help them
understand and drive down their
emissions

renewal1

– Investigate opportunities to engage in
power-purchase agreements (PPAs) to
further drive the renewables market
– Survey customers who procure their

own energy to gather data on existing
renewable procurement, and use this
to build on our existing strategy to
encourage renewable procurement
among customers

1. Backed by a REGO (Renewable Energy Guarantees

of Origin) certificate.

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Contents

DOING THE RIGHT THING CONTINUED
CLIMATE CHANGE MITIGATION AND RESILIENCE CONTINUED

NET ZERO CARBON PATHWAY CONTINUED

ON-SITE GENERATION

OFFSETTING

THIRD-PARTY VERIFICATION

– Install solar PV systems for all
new developments and major
refurbishments where possible
– In addition, aim to install solar PV

systems for the six sites identified in
the feasibility study carried out in 2020

– Continue to review the portfolio to

identify further opportunities for on-
site renewable energy generation

– Develop our company principles and

– Extend scope of GHG emissions

approach to offsetting

verification level

– Explore internal carbon pricing options
and setting up a decarbonisation fund

– Explore opportunities and the costs

– Review science-based targets annually
to ensure alignment with science and
re-baseline if necessary

and benefits associated with investing
in sustainable practices within our own
supply chain (insetting)

– Review carbon offsetting verification
schemes to ensure they are aligned
with our principles

– Support an industry net zero carbon

certification for real estate

CASE STUDY
Solar PV
performance

We currently have 13
solar photovoltaic (‘PV’)
installations across the
portfolio. Our total solar
power generation over the
past four years has increased
by 221% to 157,953 kWh. We
install solar PV systems at
all new developments where
possible and have carried
out feasibility studies to
retrofit systems at six of our
existing sites, with plans to
install in 2021/22. Although
we procure 100% renewable
electricity across the
portfolio, on-site generation
will deliver a return on
investment over time and
play a part in our net zero
carbon target.

SOLAR PV GENERATION
157,953 kWh

+22%

2021

2020

129,553

157,953

Solar panels at Barley Mow

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Annual Report and Accounts 2021

DOING THE RIGHT THING
CONTINUED

CLIMATE CHANGE MITIGATION
AND RESILIENCE CONTINUED

Green finance

Our focus on sustainability is embedded across
all our decision-making process, including
our financing strategy. This year, Workspace
developed a Green Finance Framework,
under which it can raise debt to support the
financing and refinancing of activities of an
environmental nature. These are collectively
known as Green Debt Instruments (‘GDIs’).

In March 2021, Workspace issued its first green
bond, in accordance with the Green Finance
Framework. The framework is aligned with
ICMA’s Green Bond Principles (2018 edition)
and LMA’s Green Loan Principles (2021 edition)
and addresses UN SDGs 7, 11, 12 and 13.

The £300m of proceeds will be used to finance
or refinance eligible green refurbishment
and redevelopment projects, reinforcing the
role Workspace plays in the employment-led
regeneration of areas across London as a long-
term owner of historic and character buildings
in the Capital.

Glossary

See page 241

“ This green bond, which further

strengthens our balance sheet, is the
first issued under our Green Finance
Framework, which will continue to be
a core pillar of our financial strategy
and underscores our commitment
to sustainable investment and
development practices.”

Dave Benson
Chief Financial Officer

The five pillars of our
Green Finance
Framework

Contents

1. Use of proceeds

2. Projects evaluation

Eligible green projects (‘EGPs’):
– Green buildings
– Eco-efficient and/or circular economy

adapted products, production technologies
and processes

– Renewable energy
– Clean transportation
– Energy efficiency
– Climate change adaptation
– Pollution prevention and control (waste

management)

– Clean transportation
– Sustainable water and wastewater

management

and selection

– As part of the management of its Green

Finance Framework, Workspace intends to
set up a Green Finance Committee

– The Workspace Green Finance Committee
will be responsible for final approval of:
a. Updates to the framework, to ensure

alignment with relevant market standards
and Workspace’s sustainability strategy

b. Selection of GDIs aligned with the

framework

c. Selection of EGPs
d. Management of proceeds
e. Reporting on the use of proceeds and

their impact

f. Overseeing external review process of the

framework

3. Management of

4. Reporting

5. External review

proceeds

– Workspace intends to allocate an amount

– As per market standards, Workspace will

– Workspace commissioned DNV

equivalent to the proceeds from the GDI to
an EGP portfolio

disclose publicly both allocation and impact
information in relation to GDIs issued.

to conduct an external review of this
Green Finance Framework

– Funds will be drawn from the GDI to finance
only the qualifying expenditure on EGPs or
to refinance expenditure on green projects
which have previously been funded from
other sources

– The Group aims, over time, to achieve a level
of allocation for the EGPs which matches or
exceeds the balance of net proceeds from its
outstanding GDIs

Allocation report:
– The aggregated amount of allocation of the
net proceeds to the EGP at category level;

– The proportion of net proceeds used for

financing versus refinancing

– The balance of any unallocated proceeds
invested in cash and/or cash equivalents

Impact report:
– Workspace will periodically provide

– We were pleased to receive a positive

outcome

“On the basis of the information provided by
Workspace and the work undertaken, it is
DNV’s opinion that the Framework meets
the criteria established in the Protocol, and
that it is aligned with the stated definition
of Green Bonds within the Green Bond
Principles 2018 and Green Loans within the
Green Loan Principles 2021.”

qualitative and quantitative environmental
performance reporting of the EGPs

(DNV)

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DOING THE RIGHT THING
CONTINUED

CLIMATE CHANGE MITIGATION
AND RESILIENCE CONTINUED

CASE STUDY
Ink Rooms in
Clerkenwell

Environmental and social issues are considered
throughout Workspace’s properties’ lifecycle,
of which refurbishments are a critical stage.
From the use of responsibly sourced materials,
to enabling green transport and giving back
to the local community, it is crucial to achieve
sustainability objectives on our refurbishment
projects if we want to reach our overall
ESG goals.

Workspace transformed Ink Rooms’ ageing
office space to create a vibrant business
centre with four floors of modern office and
studio space. The fourth floor offers a self-
contained unit with its own private terrace
with great views of London. The ground floor
was transformed into self-contained offices
with large shopfront windows and new glass
skylights to maximise daylight intake.

Ink Rooms achieved a “Very Good” BREEAM
Refurbishment and Fit-out rating, performing
particularly well in the management,
energy, transport and water sections of the
assessment. The building also holds a B-rated
Energy Performance Certificate. The project
achieved a 41% reduction in carbon emissions
compared to pre-refurbishment levels, going
from 37.25 kgCO2/m2 to 22.13 kgCO2/m2.

41%

reduction in carbon emissions

Contents

Ink Rooms

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DOING THE RIGHT THING
CONTINUED

CLIMATE CHANGE MITIGATION
AND RESILIENCE CONTINUED

INK ROOMS CONTINUED

Features of Ink Rooms’
sustainable design

waste diverted from landfill

98%
100%

of timber sourced from sustainable forests

The project teams
worked together
to ensure that
sustainability was
at the heart of the
building’s design.

Kahroon Tanvir
Senior Project Manager

TRANSPORT
The site offers 41 indoor secure cycling bays
and five showers and changing facilities. A very
high rating was achieved on London’s Public
Transport Accessibility Level (6a), with an
Accessibility index of 35.89.

BIODIVERSITY
A green roof was included in the design,
incorporating at least 16 different species, with
an aim to create and maintain a functional
green roof which maximises biodiversity on site
and creates habitat for local wildlife.

HEALTH AND WELLBEING
The lighting was specified to guarantee visual
performance and comfort, including daylight
dimming controls. The heating and cooling
systems were designed to provide excellent
thermal comfort in occupied spaces, with
temperature controls in each unit to allow
customers to adjust levels to match their needs.

Noise levels were reduced through tailored
insulation and glazing to meet stringent local
authority requirements, with external noise
intrusion levels not exceeding 55 decibels in
open plan offices. The heating and cooling
equipment was also specified to meet specific
noise requirements.

ENERGY
Renewable energy is provided by the 12.81kWp
solar PV system installed on the roof and low
carbon energy is provided from air source heat
pumps.

Energy efficiency features include LED lighting
with daylight sensors and motion detection, as
well as energy-efficient lifts. The building has
been designed to be predominantly naturally
ventilated, which helps to reduce the site’s
emissions.

The site presents extensive energy sub-
metering. The consumption data is
automatically stored on the Optergy energy
management software. This allows facility
management teams to closely monitor the
property’s energy consumption profile and
make energy efficiency adjustments on an
ongoing basis. Customers also have access to
the system to view their energy profiles.

WATER
The building is achieving an impressive 51%
water use reduction over the BREEAM Baseline
– equivalent to 21.63 litres per person per day.

Low-flush toilets of 3.4 litres have been fitted,
as well as showers not exceeding 8 litres per
minute.

Water metering and a leak detection system
were installed in order to continuously monitor
and manage consumption.

Contents

MATERIALS
100% of the timber used in construction was
sourced from legal and sustainable forests
(FSC and PEFC). The existing structure and
external walls were retained, reducing the
amount of new materials required. All new
materials were sourced using ISO 14001 and
BES 6001 sustainable certification.

WASTE
Construction waste has been reduced through
careful procurement, and 1,392 tonnes of
waste were diverted from landfill, which is
equivalent to approximately 98% of the total
non-hazardous waste.

MANAGEMENT
The project scored 37/50 in the Considerate
Constructors Scheme, reflecting care taken
over appearance, community, environment,
safety and workforce.

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DOING THE RIGHT THING CONTINUED

Looking after
our people
Employees,
customers
and suppliers

Supporting our employees, customers
and suppliers has been a key priority
during these uncertain times. From
ensuring our centres remained Covid-
safe, to offering a 50% rent reduction
to all customers for three months at
the start of the pandemic, and hosting
wellbeing webinars for employees and
customers, we have worked hard to look
after our people over the last year.

Equity, Diversion & Inclusion

Health & wellbeing

Professional development

Customer support

page 47

page 49

page 50

Contents

Embedding ESG
across Workspace

Listening to
our employees

Our Doing the Right Thing ESG strategy is
implemented by our ESG Committee made
up of employees from across the business.
We have committed to facilitate workshops
and seminars to equip employees with the
relevant skills and knowledge to deliver our
ESG targets.

Our induction training programme has
been revised so that each new starter
receives a two-week induction, including a
business overview from the CEO and an ESG
introduction from the sustainability team.
This year, we also introduced environmental
and social objectives for all employees across
the business.

In May 2020, in the midst of
the first national lockdown,
an employee survey was sent
out to help us understand
how employees were feeling
and the challenges they were
facing. The results informed
management on how to best
support employees during
the lockdown and beyond
that, when restrictions were
eased. The survey was carried
out by a third-party partner,
InMoment, and all responses
were confidential.

In addition to the survey,
employees were offered
the opportunity to ask the
CEO and other members
of the Executive Team
any questions they had at
virtual town hall meetings
held each quarter. These
meetings covered a number
of different themes, including
updating employees on our
financial results, how we
were supporting customers
through the pandemic and
our new brand proposition.

Employees were also
encouraged to attend
the regular employee
engagement breakfast
sessions with Stephen
Hubbard, our Chairman.
These sessions, held several
times during the year,
involve a different group of
eight employees who put
themselves forward to attend.
Participants are encouraged
to bring forward ideas, issues
and questions. Anything
shared remains anonymous
and the sessions don’t
include senior managers,
to allow employees to be
open and honest. The ideas
discussed then help inform
improvements to the business
and employee wellbeing.

As employees returned
to centre offices and our
head office, we put in place
Covid-secure measures,
including sanitising stations,
perspex screens between
desks and one-way systems
to promote social distancing,
as well as providing FAQs
and video content to ensure
staff understood the safety
measures in place.

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DOING THE RIGHT THING CONTINUED
LOOKING AFTER OUR PEOPLE CONTINUED

Q&A with the Executive Team

CLAIRE DRACUP
HEAD OF PEOPLE

Contents

Q How important has the Workspace

culture been in managing the business
through the last year?

A Our culture, with its focus on customer
service and looking after one another,
has had a huge impact on our success
and ability to continue to deliver
services this year. During the first
lockdown, we had Relief Managers
picking up Centre Managers without
cars, collecting sacks of post from
postal sorting offices and sorting
through it to make sure customers
received their post.

Everyone rallied round to cover shifts
and support colleagues with childcare
issues and our Facilities Managers
worked around the clock to make our
buildings safe for customers.

I am so proud of the way our employees
have gone out of their way this year
to support customers and each other.
They’ve demonstrated commitment,
team spirit, a desire to help and
succeed, with bags of creativity to
come up with innovative solutions.

Our focus going forward is now to build
on the existing culture to drive ongoing
improvements to customer service
and ensure this permeates through the
different roles across the Company.

I am so proud of our
employees who have
gone out of their way
to support customers
and each other.

Q The pandemic has highlighted the

importance of employee wellbeing.
What is Workspace doing to look after
its people?

A This has become a really important area
for Workspace and we’ve launched
some great new initiatives this year. Our
Charity & Social Committee has been
expanded to include Wellbeing and
we have put in place a programme of
activity for the coming year, including
continuing our walking webinars which
proved so popular during lockdown.

Both our new Head of HR and Office
Manager are responsible for driving
further enhancements to employee
wellbeing and we are launching Health
Shield as a new benefit offering a range
of physical and mental health support.

Claire is responsible for
HR, training and people
development across the
Company with a focus
on enhancing customer
service and experience.

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DOING THE RIGHT THING CONTINUED
LOOKING AFTER OUR PEOPLE CONTINUED

Equity, diversity
and inclusion (‘EDI’)

DIVERSITY
As at 31 March 2021

GENDER DIVERSITY
OF ALL EMPLOYEES

AGE DIVERSITY
OF ALL EMPLOYEES

ETHNIC DIVERSITY
OF ALL EMPLOYEES

Female
Male

125
98

20-29
30-39
40-49
50-59
60-69
70-79

53
96
44
20
9
1

White

White British
White Irish
White other

Black

Black Caribbean
Black African
Black other

159
127
5
27

24
12
8
4

Asian

21
Asian/Asian British – Indian
7
Asian/Asian British – Bangladeshi 2
1
Asian Pakistani
11
Asian other

Mixed Race

Other mixed background

Did not disclose

13
13

Contents

Further plans for 2021/22,
include interview guides and
training covering inclusivity,
fair matrix scoring techniques
and constructive feedback.
We will be implementing a
new recruitment policy and
are looking to streamline our
recruitment agencies. We
plan to work collaboratively
to improve our recruitment
process right from the start.
In order to monitor our
progress, we will improve
our current data collection
and analysis processes.

Health and
wellbeing

To support our employees
and customers during the
pandemic, we hosted a series
of virtual wellbeing events
and festivals.

We partnered with two
experts in this field, Shine and
Bodyshot, both Workspace
customers. Over the year,
Shine hosted 26 sessions
with over 1,000 attendees,
and Bodyshot delivered five
lunchtime workshops for
our employees, providing
practical tools, tips and
resources around mental and
physical health.

In March, for National
Nutrition Month, we partnered
with Outliers Wellbeing to
put on a series of ‘Walking
Webinars’ for employees to
take exercise while learning
about nutrition and energy.

Going forward, we will be
formalising our Mental Health
& Wellbeing Policy and will
incorporate wellbeing into our
charity and social committee.
The aim is to have a clear
action plan for each year
with a calendar of events and
actions. Our new Head of HR
and our new Office Manager
both have responsibilities
around culture and wellbeing
within their job descriptions.

Workspace recognises
the value of a diverse
workforce. We have
reviewed our recruitment
processes and training to
drive improvements.

We are an inclusive
organisation where everyone
is treated with respect and
dignity. Diversity is embraced
and celebrated and there
are equal opportunities for
all employees. We value our
diverse workforce, bringing
a welcome mix of skills,
experience and knowledge.
This enriches our business
and contributes to our long-
term success.

This year, we partnered with
Tectre to provide advice
on how we can continue to
ensure that Workspace is
an inclusive business. The
Executive Committee and
78 managers completed
a compulsory full-day
training session by Tectre
on Unconscious Bias with
Equality, Diversity and
Inclusion. This training
is now being rolled out
to all employees.

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Workspace Group PLC
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CASE STUDY
Unconscious
bias training

All Workspace managers
attended a full day of training on
unconscious bias with equality,
diversity and inclusion. The
training was held virtually in small
groups, mixing up colleagues
from different teams.

It covered the importance of
equity, diversity and inclusion to
a healthy workplace culture, as
well as defining unconscious bias
and understanding socialisation,
privilege and allyship.

“ This training was fantastic.

It was eye-opening and
purposefully pushed us out of
our comfort zone to explore
these important topics. I
look forward to putting
the training into practice
in my day to day work.”

Tara Dooley
Accounts Payable Manager

See page 47

Contents

DOING THE RIGHT THING CONTINUED
LOOKING AFTER OUR PEOPLE CONTINUED

Employee benefits

Attracting, retaining and developing a
dedicated and talented team of employees
who embrace our values and culture is an
important part of our business strategy.
Workspace offers its employees a wide range
of benefits, including pension contributions
of up to 10%, life insurance and private
medical insurance.

All employees may take part in the company
Sharesave scheme, allowing them to purchase
shares at the end of a three or five year period
at a reduced fixed price. We also have long
service awards for employees who have
completed more than five years’ service, and
this year 30 members of staff received a long
service award.

Our Employee Assistance Programme (‘EAP’)
is available 24/7 for any confidential help
employees or their families need. Calls are
handled by experienced therapists or advisors
who can help and assist on a variety of issues,
including but not limited to legal, family,
financial, substance abuse, consumer advice,
medical, mental health, bereavement, lifestyle,
and retirement.

In 2021/22, we plan to introduce a new benefit,
Health Shield. Health Shield helps to keep
employees and businesses in the best of
health, with a range of innovative health and
wellbeing solutions, from sports massage to
counselling. Members have access to Health
Shield PERKS, a website with a large range
of discounted retail products and services,
offers on travel, and cash back on purchases.
Employees will also have access to the NHS-
approved app-based programme to aid the
prevention, early detection and treatment
of depression and anxiety. Users also have
access to a live text chat service allowing
them to speak to a wellbeing coach and/or
a qualified psychologist.

ESG PENSION
Our pension provider Scottish Widows is
supporting the transition to a low-carbon
economy by integrating ESG considerations
into their pension portfolios, including the
Workspace default fund. Scottish Widows
aim to halve the carbon footprint of their
investments by 2030 and have a net zero
carbon emissions target across all investments
by 2050. In addition to this, Workspace
plans to offer employees the opportunity to
switch from the default fund to an ethical or
environmental pension fund option.

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Workspace Group PLC
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DOING THE RIGHT THING
CONTINUED

LOOKING AFTER OUR PEOPLE
CONTINUED

Professional
development
and training

As a people-focused business, investing in the
development of our employees is vital to ensure
our future success. Providing professional
development opportunities enhances employee
satisfaction and promotes fresh thinking and
innovation. Workspace funds professional
membership subscriptions for 30 employees in
RICS, CIPD and ACCA. A number of Workspace
employees enrolled in professional development
courses this year.

We are reviewing our appraisal process
in 2021/22, in order to make the best use
of individual strengths and address any
weaknesses. An annual training programme
available to all employees will cover subjects
such as:

People management

Planning and organisational skills

Conflict resolution

ESG

Unconscious bias

Sales management & negotiation skills

Facilities management-related subjects,
such as asbestos and fire safety

Suki Aweys at Workspace head
office, Kennington Park

Contents

CASE STUDY
Suki Aweys,
Advanced
Professional
Certificate in
Construction
Project
Management

As an addition to his Royal
Institution of Chartered
Surveyors (‘RICS’)
qualification, Suki started
the Association for Project
Management (‘APM’)
accredited ‘Advanced
Professional Certificate
in Construction Project
Management’ course in
September 2020 running
until February 2021. This
was a structured programme
focusing on Project
Management processes,
with an emphasis on the
construction industry.
Following the completion
of the course, Suki now
has to sit the APM Project
Professional Qualification
(‘PPQ’) exam to qualify.

“I took the qualification as

I felt I needed to develop my
skills as a Project Manager
(‘PM’), by understanding
different tools that can
help to deliver a successful
project. I also wanted to
better understand the
people aspect of projects.

Following this course,

I hope to become a more
efficient PM, obtaining a set
process that I understand
and apply. I have already
applied, where possible,
learnings from the course
in my day-to-day work,
including understanding
the value of personalities
in a project team and how
to navigate this in order to
deliver a successful project.

The syllabus has also helped

me develop my strategic
thinking. As PMs, we can get
very focused on the project
itself but I am starting to
consider the bigger picture
and understand the value
of business plans and
stakeholder management.”

Suki Aweys
Senior Project Manager

(Programmes) BSc (Hons)
MRICS

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LOOKING AFTER OUR PEOPLE CONTINUED

Customer
support over
the pandemic

During the periods of national lockdown, our
business centres remained open with a number
of key worker customers still in occupation
and other customers visiting on an essential
needs basis. Given the impact that the first
lockdown had on our customers and their
cash flow, we took the immediate decision
to offer all our business centre customers an
absolute rent reduction of 50% for the three
months to the end of June 2020. On a case-
by-case basis, we agreed rent deferral plans
and, in the second half of the year, we offered
short-term lease incentives for new customers
joining who would not be using their office until
Government restrictions were eased.

In line with Government guidelines, we have
taken extensive measures to keep our business
centres safe for customers returning to work.
These include signage to promote social
distancing, screens, hand sanitiser dispensers,
one-way systems, restrictions on use of
communal areas and increased daily cleaning
of the common areas in our business centres.
We also supply additional information and
resources for customers via our website. The
majority of our buildings are low-rise so the
severe lift restrictions that needed to be put
in place have had limited impact. We have
also increased the amount of cycle storage at
centres, where possible.

Contents

Customer engagement
on ESG

Supplier engagement
and Living Wage

“It is fantastic to be part
of The Leather Market
Environmental Group
– it is a great initiative
to bring together the
different tenants and get
their perspectives and
involvement to make their
offices and the workspace
more sustainable.”

Customer at

The Leather Market

50%

absolute rent reduction offered
to customers for the first
quarter of FY21

Our Sustainability Team are always happy to
respond to the increasing number of customer
enquiries around ESG issues. Our customers
are asking us questions about our energy
contracts, recycling services, energy-saving
initiatives and whether the centre they occupy
is a certified green building.

To help customers with their ESG ambitions,
Workspace’s Sustainability Team and Anthesis,
a customer based at The Leather Market, co-
hosted a webinar on “Activating your business’
sustainability aspirations”. The discussion
centred on how customers can use the UN
SDGs and the B Corp framework to help them
set their ESG objectives and targets. There
were 26 attendees and positive feedback on
the ‘case study’ style content of the session.

There are three customer environmental
groups set up at Kennington Park, The Leather
Market and Parkhall Business Centre. It has
been difficult to set up more this year due
to the pandemic but we hope to do so in
the coming year. The environmental groups
encourage collaboration between customers
and the centre teams to reduce their
environmental impact through joint initiatives
and through sharing energy and recycling data.
Customer engagement is vital in order for us to
meet our goal of becoming a net zero carbon
business by 2030.

Workspace and Sport Pursuit, a customer
at Kennington Park, are also part of the
Better Buildings Partnership (‘BBP’) Owner
& Occupier Forum, which addresses the key
challenges associated with engagement on
sustainability issues and how both parties can
work collaboratively to achieve their net zero
carbon goals.

Workspace already pays its direct employees
the London Living Wage and we are
committing to bring all third-party contractors
onto the Living Wage by April 2022. The
London Living Wage is based on the cost of
living and is voluntarily paid by nearly 7,000
UK employers who believe a hard day’s work
deserves a fair day’s pay.

In order to gain a better understanding
of our supplier base, we sent out an ESG
questionnaire to all suppliers which included
questions around human rights, environmental
and social targets and certifications, local
and sustainable procurement, diversity, living
wage and community engagement. This
questionnaire will form part of our supplier
onboarding process.

We also provide incentives to our suppliers to
drive environmental performance.

For example, our main waste contractor is
set ambitious recycling targets each year. We
have received external recognition for our
engagement with our suppliers and were listed
on the CDP Supplier Engagement Leaderboard
this year.

This means that Workspace is among the
top 7% assessed for supplier engagement
on climate change, based on our 2020
CDP disclosure.

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Employment-led
regeneration is at the
heart of the business.
I want our activity to
have a real impact on
the local community.

Graham Clemett
Chief Executive Officer

Workspace Group PLC
Annual Report and Accounts 2021

DOING THE RIGHT THING CONTINUED

Inspiring the
next generation
and supporting
our communities

Building communities and improving our
neighbourhoods through our focus on
employment-led regeneration of London
over the long term is an important part
of our business strategy. In addition to
the ESG Committee, we have a Charity
& Social Committee, which oversees
fundraising, volunteering and social
activities for employees and customers.
Fundraising activities and volunteering
were significantly impacted this year due
to Covid-19 restrictions, but thanks to
virtual events we were able to action the
following initiatives.

Highlights for the year

Social impact project review

page 53

page 54

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Contents

DOING THE RIGHT THING CONTINUED
INSPIRING THE NEXT GENERATION AND SUPPORTING OUR COMMUNITIES CONTINUED

EMPLOYEE VOLUNTEERING
To help our communities recover from
the devastating short and long-term
impacts of the pandemic, Workspace
encourages employees to volunteer
by giving employees up to three paid
volunteering days per annum. In addition
to this, we plan to increase engagement
with our customers and suppliers on
volunteering opportunities to have an
even greater impact.

£50,000 1,000

£35,000

Over £50,000 was raised by
Workspace employees for GOSH
over a two-year partnership

£2,500 donated to Kitchen Social,
to fund 1,000 meals for children
in London

£35,000 donated to Single
Homeless Project, which has been
designated as our new charity
partner for the next year

28 laptops and iPhones donated
to London-based charity XLP

Hosted 23 food banks for the
Trussell Trust across our centres

38 Workspace volunteers
took part in the InspiresMe CV
and interview workshops for
disadvantaged young Londoners

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DOING THE RIGHT THING
CONTINUED

INSPIRING THE NEXT GENERATION
AND SUPPORTING OUR COMMUNITIES
CONTINUED

Highlights
for the year

Social Mobility
Pledge

To demonstrate our commitment to social
impact, we signed up to the Social Mobility
Pledge which focuses on three key areas:

1. PARTNERSHIP

Partner with schools or colleges to
provide coaching to people from
disadvantaged backgrounds.

2. ACCESS

Provide structured work experience
to those from disadvantaged
backgrounds.

3. RECRUITMENT

Adopt open employee recruitment
practices and promote a level playing
field for those from disadvantaged
backgrounds.

Our InspiresMe programme covers the first
two items; see our plans on page 56 and
more information can be found on page 47
about how we are revising our recruitment
practices to promote inclusivity.

Charity cycle
for NHS heroes

Food bank
collections

Virtual work
experience

Contents

Following the success of food bank collections
at 23 of our centres, we have put together a
step-by-step guide for centre managers with
information on how to find their nearest food
bank, transport information and promotion
tips, so that it’s easy for all centres to get
involved. To keep up the momentum, we plan
to promote the collections leading up to each
school holiday which will give families the extra
support they need during times when school
meals aren’t available.

We support members of our staff who want to
do individual fundraising activities throughout
the year, particularly important in the last year
when so many employees have been impacted
by the pandemic. Sam Palmes, our Head
of Building, took part in a 209-mile charity
cycle ride in aid of NHS Heroes in September.
Climbing a total of 18,000 ft. of hills, the
three-day endurance test saw Sam bicycle
from Penzance, the furthest westerly town
in Cornwall, through Falmouth and the Eden
Project, to Plymouth.

Sam raised £50,000 for NHS frontline staff
– from cleaners to catering staff, porters,
back office administrators, nurses, health
care assistants, paramedics and doctors. The
money raised will go towards supporting
the health and wellbeing of these incredible
individuals, including counselling support and
specialist washing facilities for staff treating
Covid-19 patients, so they can keep on
providing the very best care for their patients.

“ It was tough going and there were
points I thought I might not finish!
But it was hugely rewarding, and I saw
some beautiful scenery along the way
– all in the name of a great cause.”

Sam Palmes
Head of Building

£50k

raised for NHS
frontline staff

collections at
23 of our centres

Our InspiresMe programme is a key part of our
Doing the Right Thing strategy which aims to
support disadvantaged young people in our
communities.

This year, due to the pandemic, we organised
virtual CV reviews and interview workshops
with charities XLP and Inspire. 38 Workspace
volunteers took part, engaging with young
people. The sessions worked well virtually, and
the extra flexibility meant that our centre staff
were more able to get involved.

Liliana Cardoso, Assistant Centre Manager
at Clerkenwell Workshops, helped run a
successful virtual work experience session for
Hackney City Academy’s year 10 students as
part of our InspiresMe programme.

“ I was able to share my professional
experience as well as provide some
(hopefully) good advice. The sessions
were exciting and interactive – I answered
questions from the young people via video,
reviewed their CVs and gave them advice
and feedback on career opportunities.
I think initiatives like this are very important
to help young people on their first steps to
initiate their career paths.”

Liliana Cardoso
Assistant Centre Manager

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Contents

DOING THE RIGHT THING CONTINUED
INSPIRING THE NEXT GENERATION AND SUPPORTING OUR COMMUNITIES CONTINUED

Social impact
project review

This year, we conducted a review of
our social impact work to help us build
on our existing social impact strategy
around employment-led regeneration
in London.

Social challenges in
Workspace boroughs

The starting point of the review was
to identify the social challenges within
the London boroughs in which we
operate, in order to target our activities
to communities in need, particularly
during and after the pandemic. The key
social challenges, all underpinned by
unemployment, included housing (cost
of living), crime, language barriers, youth
criminality, and mental health. These
have led to employment inequalities
including ethnicity gap, youth
unemployment and gender pay gap.

We acknowledge that our communities
need businesses like ours to help them,
particularly as they recover from the
pandemic.

CRIME

HOUSING

YOUTH
CRIMINALITY

LANGUAGE
BARRIERS

MENTAL
HEALTH

THE KEY SOCIAL CHALLENGES ACROSS OUR BOROUGHS

UNEMPLOYMENT

KEY EMPLOYMENT INEQUALITIES IN OUR BOROUGHS

ETHNICITY GAP

YOUTH UNEMPLOYMENT

GENDER PAY GAP

AGGRAVATING FACTOR

COVID-19

GENDER UNEMPLOYMENT GAP

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Contents

DOING THE RIGHT THING CONTINUED
INSPIRING THE NEXT GENERATION AND SUPPORTING OUR COMMUNITIES CONTINUED

SOCIAL IMPACT PROJECT REVIEW CONTINUED

Internal feedback

We feel strongly that our community
activities should align with our
Company’s overarching brand and
commercial strategies. As such, as
part of the project, Impact Advisors
interviewed 17 internal stakeholders at
Workspace to help shape and garner
support for the Company’s social
impact work, including the CEO, Asset
Management Director, members of the
marketing team and Centre Managers.

Ambition to scale impact
but without losing depth
“ The previous InspiresMe project
felt really good – but we have
3,000 customers and would like to
do more. It was never quite big
enough.”

“ We should give our teams

freedom within a framework. With
our centres well known in their
local communities, the right model
is a programme that’s well
organised at a corporate level but
executed at a local level.”

Strong support for utilising skills
base of employees and customers
“ 80% of our employees have
transferable skills that could
be really beneficial to our
communities.”

“ Involving employees, and

ideally customers as well, is
critical – we want them to have
skin in the game. Not many
property companies can get
their customers involved.”

Social impact is a priority and
now is the time to speak out
“ Social impact is definitely a
priority. It’s very important
for the direction of the
business. There’s lots of
potential we haven’t yet
tapped. We need to co-
ordinate it overall,
tie it together and leverage
its potential.”

Measuring impact is critical
for all stakeholders
“ We need to measure the impact of
our work – a challenge in the past
has been following up with young
people we’ve worked with so that
we can assess the impact we have.”

Strong support for employment-led
regeneration of London as the main theme
“ Employment-led regeneration
is at the heart of the business
– it’s a broader ambition than
just social impact – it’s our
business model.”

Strong agreement that impact
should be linked to core business
“ Any social impact activity
needs to be tied to our
vision and purpose –
which is all about giving
businesses the freedom
to grow.”

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Contents

DOING THE RIGHT THING CONTINUED
INSPIRING THE NEXT GENERATION AND SUPPORTING OUR COMMUNITIES CONTINUED

Priorities ahead

Scaling up our InspiresMe programme
This is a key part of our Doing the Right
Thing strategy, focusing on supporting
disadvantaged young people in the areas of
London in which we operate.

Following the review, we will be scaling up
our InspiresMe programme and re-launching
it in the coming year. With our unique blend
of inspiring properties and diverse customer,
employee and supplier mix, we have the
opportunity to inspire a significant number of
young people in London.

InspiresMe will be a rolling programme
of inspiration, knowledge, support and
experience aimed at motivating those in our
communities with the greatest barriers to
employment, or at greatest risk of NEET (Not
in Education, Employment or Training), to
grow to their full potential. Potential initiatives
include inspirational talks hosted at our
centres, CV and career workshops, one-to-one
mentoring and structured work experience and
apprenticeship programmes.

New charity partner
We have entered a new charity partnership
with the Single Homeless Project (SHP), a
London-wide charity working to prevent
homelessness and help vulnerable and socially
excluded people to transform their lives. SHP
have 83 hostels across London.

Volunteering opportunities for our employees
will include career workshops, outdoor
activities, including sports and gardening, and
cooking lessons. All employees will be given up
to three paid volunteering days a year to get
involved in these activities.

In 2020/21, we donated £35,000 to SHP
and we have a programme of fundraising
and volunteering opportunities planned for
2021/22. These include a half or full marathon
walk around Workspace centres and a
sponsored adventure.

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OUR KEY PERFORMANCE INDICATORS

Contents

Financial and non-financial key performance indicators
(KPIs) are used to measure our performance and how
well we are delivering on our strategy.

FINANCIAL PERFORMANCE

1. NET RENTAL INCOME

DEFINITION
Net rental income is the
rental income receivable after
payment of direct property
expenses, such as service
charge costs, and other direct
unrecoverable property
expenses.

WHY THIS IS IMPORTANT TO WORKSPACE
This is one of the most important metrics for
Workspace as it drives our trading profit, which
in turn determines dividend growth.

MOVEMENT IN 2020/21
The decrease in Net Rental Income to £81.5m
was driven by the £19.9m of rent discounts
we gave customers in the year, the fall in
occupancy and average rent per sq. ft., as well
as a greater than usual charge for expected
credit losses.

NET RENTAL INCOME
-33%

£81.5m

2. TRADING PROFIT AFTER INTEREST

DEFINITION
Trading profit after interest
is net rental income, less
administrative expenses and
finance costs but excluding
exceptional finance costs.

WHY THIS IS IMPORTANT TO WORKSPACE
Trading profit after interest is a key measure for
Workspace and determines dividend growth.
We report and review this figure at Board level
on a monthly basis compared to previous years
and to budget.

Further details in note 8 to the
financial statements.

Trading profit after interest demonstrates
the underlying performance of the trading
business and strength of our business model.
Both the Executive Directors are incentivised
on trading profit after interest.

MOVEMENT IN 2020/21
Trading profit after interest for the year was
£38.7m, down 52% on the previous year. Net
rental income is the key driver of trading profit.

TIME PERIOD
MEASURED
Monthly

2021

2020

2019

81.5

122.0

111.0

TRADING PROFIT AFTER INTEREST
-52%

£38.7m

38.7

2021

2020

2019

81.0

72.4

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OUR KEY PERFORMANCE INDICATORS CONTINUED

FINANCIAL PERFORMANCE CONTINUED

3. EPRA NTA PER SHARE

DEFINITION
EPRA NTA per share is a
definition of net tangible
assets as set out by the
European Public Real Estate
Association. It represents net
assets minus any intangible
assets after excluding
financial derivatives and
deferred taxation relating to
valuation movements and
derivatives divided by the
number of shares in issue.

Further details in note 9 to the
financial statements.

4. DIVIDEND PER SHARE

DEFINITION
The dividend payment per
share in issue.

WHY THIS IS IMPORTANT TO WORKSPACE
EPRA NTA is a key external measure for
property companies and is used to benchmark
against share price. It is a useful measure for
Workspace as it excludes any exceptional
items and movements on financial derivatives.

MOVEMENT IN 2020/21
Our EPRA NTA at 31 March 2021 was £9.38,
down 13.8% from the prior year.

TIME PERIOD
MEASURED
Six monthly

EPRA NTA PER SHARE
-13.8%

£9.38

2021

2020

2019

9.38

10.88

10.85

WHY THIS IS IMPORTANT TO WORKSPACE
We aim to provide good returns for our
shareholders, and also work within our REIT
requirements for income distribution. Dividend
per share is a key measure of the returns we
are providing to our investors.

MOVEMENT IN 2020/21
We deferred the decision on paying an interim
dividend at the half year due to market
uncertainty. Given the robust full year trading
profit performance and our committed
policy to pay dividends out of earnings, the
Board has recommended a final dividend of
17.75p per share.

TIME PERIOD
MEASURED
Six monthly

DIVIDEND PER SHARE
-51%

17.75p

17.75

2021

2020

2019

36.16

32.87

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Contents

OUR KEY PERFORMANCE INDICATORS CONTINUED

FINANCIAL PERFORMANCE CONTINUED

5. LIKE-FOR-LIKE RENT ROLL GROWTH

DEFINITION
Like-for-like properties
are those with stabilised
occupancy, excluding
recent acquisitions and
buildings impacted by
significant refurbishment or
redevelopment activity.

WHY THIS IS IMPORTANT TO WORKSPACE
Like-for-like rent roll growth is an important
measure for our business and shows the
performance of our core portfolio of
properties. We monitor the like-for-like rent
roll on a weekly basis in weekly management
meetings and also as a key performance
indicator in our monthly Board meetings.

MOVEMENT IN 2020/21
Like-for-like rent roll has fallen 23.9% this
year due to occupancy declining as some
customers vacated their leases as a result of
the pandemic. The decrease in like-for-like rent
roll was also driven by a 12.9% fall in average
rent per sq. ft.

LIKE-FOR-LIKE RENT ROLL GROWTH
-23.9%

-23.9%

-23.9

Rent roll is the current
annualised net rents
receivable for occupied units
at the date of reporting.

6. LIKE-FOR-LIKE OCCUPANCY

DEFINITION
Like-for-like occupancy is the
area of like-for-like space let
divided by the like-for-like net
lettable area.

WHY THIS IS IMPORTANT TO WORKSPACE
Like-for-like occupancy, pricing and rent roll
give us vital information on the performance of
our core properties, and early indicators of any
decline in these KPIs mean we can be timely in
investigating and reacting to these changes.

MOVEMENT IN 2020/21
We have seen a significant decline in like-
for-like occupancy this year as a result of the
pandemic. It fell to 81.6% in the year but we
have seen an improving trend in customer
activity with occupancy stabilising in the
fourth quarter.

LIKE-FOR-LIKE OCCUPANCY
-11.7%

81.6%

-11.7

2021

2020

1.9

2019 2.2

TIME PERIOD
MEASURED
Weekly

2021

2020

0.9

2019 -0.9

7. PROPERTY VALUATION

DEFINITION
The independent valuation
of our property portfolio,
currently valued by CBRE
Limited.

See note 10 for reconciliation
to IFRS carrying value of
investment property.

WHY THIS IS IMPORTANT TO WORKSPACE
Our properties are critical to our business and
the valuation demonstrates the value we are
delivering to our shareholders and a measure
of how well we are managing our buildings
and driving rental income. Whilst we cannot
control yield movements, we can enhance the
value of our properties through active asset
management, including refurbishment and
redevelopment activity.

MOVEMENT IN 2020/21
There was an underlying decrease of 10% in the
valuation of our property portfolio in the year.
This was driven by decreases in ERV per sq.
ft. reflecting price reductions on lettings and
renewals in the year.

See Property Valuation section of the Business
Review on pages 71 and 80 for more detail.

PROPERTY VALUATION
-10%1

£2,324m

TIME PERIOD
MEASURED
Six monthly

2021

2020

2019

2,324

2,574

2,604

1. Underlying

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Contents

OUR KEY PERFORMANCE INDICATORS CONTINUED

FINANCIAL PERFORMANCE CONTINUED

8. TOTAL PROPERTY RETURN

DEFINITION
Total Property Return is the
return for the year combining
the valuation movement on
our portfolio and the income
achieved in the year.

See Glossary of Terms on
page 241.

WHY THIS IS IMPORTANT TO WORKSPACE
This measure shows how our property
portfolio has performed in terms of both
valuation change and income generated. This
figure is produced by MSCI, an independent
Investment Property Databank (‘IPD’), and is
compared to a benchmark group so that we
can see how we are performing relative to
similar companies. Total Property Return, and
performance against the benchmark, form
part of the bonus objectives for the Executive
Directors and LTIPs for all people in schemes.

9. TOTAL SHAREHOLDER RETURN

MOVEMENT IN 2020/21
Capital and income returns have led us to under
perform compared to the IPD benchmark this
year. This is mainly driven by the decline in
property valuation in the year.

DEFINITION
Total Shareholder Return
is the return obtained by a
shareholder, calculated by
combining both share price
movements and dividend
receipts.

See Glossary of Terms on
page 241.

WHY THIS IS IMPORTANT TO WORKSPACE
This measure is important to Workspace as it
shows the value that our shareholders receive
from investing in Workspace shares. This
measure forms part of the performance criteria
within our LTIP scheme for those people in
schemes.

MOVEMENT IN 2020/21
Total shareholder return has increased due
to a recovery in the share price after being
adversely impacted at the start of the year
by market turmoil, following the outbreak of
Covid-19.

TIME PERIOD
MEASURED
Annually

TOTAL PROPERTY RETURN

-5.86%

2021

2020

2019

4.48

7.7

TOTAL SHAREHOLDER RETURN

8.6%

-18.7

2021

8.6

2020

-0.5

2019

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Contents

OUR KEY PERFORMANCE INDICATORS CONTINUED

NON-FINANCIAL PERFORMANCE

1. CUSTOMER ENQUIRIES

DEFINITION
Customer enquiries represent
the number of enquiries
we receive for our space.
Enquiries come through our
website, via phone, from
walk-ins or existing customers
looking to expand, contract or
move locations.

2. VIEWINGS

DEFINITION
This means the number of
viewings of individual units
by new or existing customers
looking for new or additional
space.

3. OFFER LETTERS

DEFINITION
Offer letters are sent to
prospects once they have
viewed one or multiple
Workspace units and
requested an offer containing
pricing information and lease
terms.

WHY THIS IS IMPORTANT TO WORKSPACE
Measuring enquiries helps us to assess the
strength of demand for our product. Our
internal marketing platform generates
enquiries both on and offline and we can
increase digital marketing spend to target
enquiries as required, for example around the
launch of a new building.

MOVEMENT IN 2020/21
Customer enquiries were significantly
impacted by lockdowns during the year, with
monthly average enquiries down by 32%.
As the roadmap for the easing of Government
restrictions was announced, and the vaccine
rollout continued, enquiries recovered strongly
through the fourth quarter.

WHY THIS IS IMPORTANT TO WORKSPACE
Viewings are often the first opportunity a
customer has to see the quality of our space.
It’s key to convert as many viewings as possible
but even if it does not lead to the prospect
taking space, the positive impression they will
gain is likely to lead them to come back to us in
the future.

MOVEMENT IN 2020/21
As with enquiries, viewings were impacted
by the lockdowns and restrictions on public
movement. As restrictions eased, viewings
picked up and we saw increased conversion
from enquiries to viewings and lettings.

WHY THIS IS IMPORTANT TO WORKSPACE
Measuring the number of offer letters we send
out allows us to assess the success of our
customer viewings and demand for our space.

MOVEMENT IN 2020/21
The average number of offer letters per month
decreased this year due to lockdowns and the
fall in demand.

TIME PERIOD
MEASURED
Daily

CUSTOMER ENQUIRIES
Monthly average

739

2021

2020

2019

VIEWINGS
Monthly average

328

2021

2020

2019

OFFER LETTERS
Monthly average

247

2021

2020

2019

247

739

1,087

1,048

675

627

449

397

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Contents

OUR KEY PERFORMANCE INDICATORS CONTINUED

NON-FINANCIAL PERFORMANCE CONTINUED

4. NEW LETTINGS

DEFINITION
This measures the number of
lettings that Workspace signs
every month.

WHY THIS IS IMPORTANT TO WORKSPACE
This is a key measure for the business as
lettings drive our net rental income and, as a
result, trading profit.

MOVEMENT IN 2020/21
Levels of lettings decreased by 20.7%
year on year, a relatively robust performance
given the significant restrictions on public
movement in relation to the Covid-19
pandemic, as well as lockdowns limiting
the volunteering opportunities.

LETTINGS
Monthly average

2021

2020

2019

103

121

5. RENEWALS

DEFINITION
This measures the number of
lease renewals that we sign
with existing customers every
month.

WHY THIS IS IMPORTANT TO WORKSPACE
Renewals are important as they demonstrate
how sticky our customers are and help us to
capture reversion on our portfolio.

MOVEMENT IN 2020/21
The level of renewals was significantly lower in
the year. This is because we proactively worked
to retain customers, agreeing new leases
prior to their renewal date as they reduced
their space requirements due to the impact
of Covid-19. If we include these retentions, the
monthly average number is 63.

RENEWALS
Monthly average

2021

2020

2019

TIME PERIOD
MEASURED
Weekly

TIME PERIOD
MEASURED
Monthly

6. EMPLOYEE VOLUNTEERING DAYS

DEFINITION
The number of days spent by
employees volunteering or
fundraising for our selected
charities.

WHY THIS IS IMPORTANT TO WORKSPACE
Giving back to our communities is important
to Workspace, and we have a number of
chosen charities that we support as part
of our ‘Doing the Right Thing’ strategy. In
particular, we believe we are well positioned
to provide educational and careers support
to disadvantaged young people as part of
our InspiresMe programme, and many of our
employees have got behind this work.

MOVEMENT IN 2020/21
The number of volunteering days is lower than
last year due to many of our employees working
remotely for much of the year as a result of
the Covid-19 pandemic, as well as lockdowns
limiting the volunteering opportunities.

EMPLOYEE VOLUNTEERING DAYS

TIME PERIOD
MEASURED
Annually

2021

2020

2019

121

101

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PRINCIPAL RISKS AND UNCERTAINTIES

Contents

Response to Covid-19

The Covid-19 pandemic and the resulting macroeconomic uncertainty had
a significant impact on Workspace and its customers throughout the year.
The planned response included:

Risk management
is an integral part
of all our activities.
Our culture drives us
to consider the risks
and opportunities
of any new
business decision.

We focus on key risks which could impact
on the achievement of our strategic goals
and therefore on the performance of our
business. Risks are considered at every level
of the business including when approving
corporate transactions, property acquisitions
and disposals and whenever undertaking
refurbishment and redevelopment projects.

We have created a positive culture within
Workspace which encourages open
communication and engagement. This
enables staff from all areas of the business
to feel free to raise risks or opportunities,
no matter how small, to their managers and
teams. This culture means that information
is communicated across the business well.
We make every effort to engage staff with
risk-related issues, particularly those which are
new and emerging so that we are managing
our lower level risks as well as the more
strategic ones.

The Group’s Risk Management framework
was updated in the year with the introduction
of the Board Risk Committee which is
now responsible for overseeing the risk
management framework and advises the
Board on risk appetite, tolerance and strategy.
The Risk Committee is supported by the
Executive Committee and the newly formed
Risk Management Group, comprising senior
managers from across the business. Further
details of the framework can be found on
page 166.

EMPLOYEES
The health and safety of our employees is
a top priority. Following the Government’s
recommendations in March, our employees
were asked to work from home and the
relevant technology was quickly provided to
allow them to do so.

As restrictions were relaxed, the office was
made safe to allow for a gradual return to
the office in line with government guidelines.
New measures such as clear signage and the
use of one-way systems were put in place to
encourage social distancing. Hand sanitiser
stations were made available at all sites and
new cleaning methods introduced.

CUSTOMERS
Many of our customers suffered an immediate
impact to their income and cash flow during
the initial lockdown period. Workspace offered
a 50% discount to all business centre customers
to help them through this difficult time.

Whilst working remotely, our centre staff
maintained regular contact with our customers
to keep them abreast of actions being taken
and to answer any queries.

As lockdown eased, our staff returned to the
centres and were on hand to assist customers
in returning to their offices. A back to business
hub was added to our website to provide
our customers with useful information and
resources as they return.

REGULATION
Workspace has kept up-to-date with
Government guidelines and sought advice
from professionals where necessary.

PROPERTIES
The majority of our customers worked
remotely for much of the year. However, our
buildings remained open for those customers
requiring access and increasing numbers
did return to their offices during periods of
reduced restrictions.

Steps were taken to provide a safe and
hygienic environment for our customers to
work in, including enhanced security and a
changes to cleaning specifications, such as
increasing daytime services.

FINANCIAL POSITION
During this period of uncertainty, the Group
acted swiftly to implement cost saving
measures and control capital expenditure
to protect its strong financial position.
Management regularly reviewed performance
reports and forecasts to understand the
impact on cash flows and control covenants.

The Group met all loan covenants throughout
the year and issued a £300m green public
bond in March 2021 which further strengthened
its financial position. As at 31 March 2021, the
Group had cash and undrawn credit facilities
of £434m along with substantial headroom on
its financial covenants and no material debt
maturities until June 2023.

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Contents

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

Climate
change risk

Doing the Right Thing

See pages 34 to 56

Workspace recognises that climate change is
having and will continue to have an increasing
impact on our business. Our properties are
at risk from physical climate-related issues
including changes in temperature extremes
leading to increase cooling and heating loads,
changes in precipitation leading to flash
flooding, and physical damage to buildings
from extreme weather events, which in turn
can lead to greater stresses on our properties.

During the year we launched our Net Zero
Carbon Strategy with the goal of becoming a
net zero carbon business by 2030. Details of
how we plan to achieve this can be found on
page 40.

It is now widely recognised that ESG issues
present a financial risk to the global economy.
In an effort to improve transparency, the
Task Force on Climate-related Financial
Disclosures (TCFD) framework provides
guidance to companies on how to improve
reporting on climate-related financial risks
and opportunities. Workspace supports the
TCFD recommendations and is committed
to implementing them.

The TCFD framework includes risk
management. A separate risk register for
climate change related risks is managed by
the Head of Sustainability. Details of the risks
considered are provided on page 90.

Ongoing impact
of Brexit

Changes to
principal risks

The UK has now entered into a trade
agreement with the EU, removing the most
significant risk of a no-deal Brexit. The Risk
Committee and the Board have continued to
consider the potential impacts that Brexit may
have on the business throughout the year.

Workspace operates solely in London with
no international activities. The main risks to
the Group are the impact on the UK economy
and Workspace customers.

Our key mitigation activities in relation
to Brexit are:
– Modelling and stress testing our business
plans and viability throughout the year
– Reviewing and monitoring loan covenants

and borrowing levels

– Regular communication with customers

and stakeholders to gather information on
potential Brexit impacts

– Review of any key contracts which may be

impacted by Brexit

– Consideration of the potential impact on

employees, and communication with staff
as and when applicable

– Liaising with our advisors on any potential

changes to regulation which may arise

We continue, as always, to track our customer
demand, pricing and vacations levels on a
weekly basis. Our current level of borrowings
and financial covenant headroom also helps
to maintain a steady position following the
transition period.

New risks
Two risks have been elevated to principal
risks in the year:

Customer payment default (risk 5)
The Covid-19 pandemic has had a significant
impact on many companies, including our
customers, leading to an increased risk
of customers being unable to meet their
rental obligations.

Third party relationships (risk 8)
To enable us to offer our customers the high
level of service that is expected at our centres,
we partner with carefully selected suppliers.
Failure of these partners to deliver a high-
quality service could impact on customer
satisfaction and ultimately demand for our
product. As we increase our focus on the
services we offer to customers, this risk has
been elevated to a principal risk.

Changing risks
Reputation
Reputation was previously considered
as a principal risk, but is now recognised
as being a consequence of many of our
principal risks and as such, is now included
as an Impact Criterium.

Business interruption
The Group’s response to business interruption
has been fully tested by the impact of Covid-19
over the past year. The risk still exists, but is
considered within all other principal risks and is
no longer disclosed as a stand alone risk.

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Annual Report and Accounts 2021

Contents

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

CHANGES TO PRINCIPAL RISKS CONTINUED

PRINCIPAL RISKS

1. Customer demand

2. Financing

3. Valuation

4. Acquisition pricing

5. Customer payment default

6. Cyber security

7. Resourcing

8. Third party relationships

9. Regulatory

Key:

New
No change
Increased from last year

Decreased since last year

page 66

page 67

page 68

page 69

page 70

POSSIBLE

LIKELIHOOD

UNLIKELY

IMPACT

SEVERE

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Workspace Group PLC
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Contents

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

1. Customer demand

2. Financing

PRINCIPAL RISK
The move to more flexible working, particularly
working patterns, has accelerated in the past
year as a result of Covid-19. Opportunities
for growth could be missed without a clear
branding strategy to meet these changing
demands.

RISK IMPACT
– Fall in occupancy levels at our properties
– Reduction in rent roll
– Reduction in property valuation

MITIGATION
– Launched a new, more intuitive consumer
website to grow direct web enquiries and
drive organic search

– Broad mix of buildings across London with
different office experiences at various price
points to match customer requirements

– Pipeline of refurbishment and

redevelopments to further enhance the
portfolio

– Weekly meeting to track enquiries, viewings
and lettings to closely track customer trends
and amend pricing as demand changes

– Centre staff maintain ongoing relationships
with our customers to understand their
requirements and implement change to
meet their needs

– Business plans are stress tested to assess

the sensitivity of forecasts to reduced levels
of demand and implement contingency
measures.

– Initiated a brand campaign to raise

awareness of our differentiated brand offer
with digital and out of home advertising

IMPACT

Severe

PROBABILITY (POST-MITIGATION)

Possible

CHANGE FROM LAST YEAR
Increase due to impact
of Covid-19 on economy

RISK APPETITE

Medium

LINK TO STRATEGY

Customer-led growth
Operational excellence
Doing the Right Thing

LINK TO KPIS

Financial: 1, 2, 5, 6, 8
Non-financial: 1, 2, 3, 4, 5

PRINCIPAL RISK
There may be a reduction in the availability
of long-term financing due to a continued
economic recession, which may result in an
inability to grow the business and impact
Workspace’s ability to deliver services to
customers.

RISK IMPACT
– Inability to fund business plans and invest in

new opportunities

– Increased interest costs
– Negative reputational impact amongst

lenders and in the investment community

MITIGATION
We regularly review funding requirements for
business plans and we have a wide range of
options to fund our forthcoming plans. We
also prepare a five-year business plan which is
reviewed and updated annually. Further detail is
provided in the Viability Statement on page 81.

We have a broad range of funding relationships
in place and regularly review our refinancing
strategy. We also maintain a specific interest
rate profile via use of fixed rates and swaps on
our loan facilities so that our interest payment
profile is stable.

Loan covenants are monitored and reported to
the Board on a monthly basis and we undertake
detailed cash flow monitoring and forecasting.

During the year we extended our Revolving
Credit Facility for a further year and launched
a successful £300m green bond, providing the
Group with adequate funds for future plans.

IMPACT

Severe

PROBABILITY (POST-MITIGATION)

Unlikely

CHANGE FROM LAST YEAR
Decrease following
issue of green bond

RISK APPETITE

Low

LINK TO STRATEGY

Operational excellence
Doing the Right Thing

LINK TO KPIS

Financial: 2, 4, 9

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Workspace Group PLC
Annual Report and Accounts 2021

Contents

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

3. Valuation

4. Acquisition pricing

PRINCIPAL RISK
The macroeconomic uncertainty could have
an impact on asset valuations, leading to a
devaluation derecognition that misaligns with
Workspace investment. This may result in a
reduction in return on investment and negative
impact on covenant testing.

RISK IMPACT
– Financing covenants linked to loan to value

(‘LTV’) ratio

– Impact on share price

MITIGATION
Market-related valuation risk is largely
dependent on independent, external factors.
We maintain a conservative LTV ratio which
can withstand a severe decline in property
values without covenant breaches.

We monitor changes in sentiment in the
London real estate market, yields and pricing
to track possible changes in valuation. CBRE,
a leading full-service real estate services and
investment organisation, provides twice yearly
valuations of all our properties.

Alternative use opportunities, including mixed-
use developments, are actively pursued across
the portfolio.

IMPACT

High

PROBABILITY (POST-MITIGATION)

Possible

CHANGE FROM LAST YEAR
Increase due to impact of
Covid-19 on the economy

RISK APPETITE

Medium

LINK TO STRATEGY

Customer-led growth
Operational excellence
Doing the Right Thing

LINK TO KPIS

Financial: 3, 5, 7, 8, 9

PRINCIPAL RISK
Inadequate appraisal and due diligence of a
new acquisition could lead to paying above
market price leading to a negative impact on
valuation and rental income targets.

RISK IMPACT
– Negative impact on valuation
– Impact on overall shareholder return

MITIGATION
We have an acquisition strategy determining
key criteria such as location, size and potential
for growth. These criteria are based on the
many years of knowledge and understanding
of our market and customer demand.

A detailed appraisal is prepared for each
acquisition and is presented to the Investment
Committee for challenge and discussion prior
to authorisation by the Board. The acquisition
is then subject to thorough due diligence prior
to completion.

Workspace will only make acquisitions that are
expected to yield a minimum return and will
not knowingly overpay for an asset.

IMPACT

High

PROBABILITY (POST-MITIGATION)

Possible

CHANGE FROM LAST YEAR
No change

RISK APPETITE

Medium

LINK TO STRATEGY

Customer-led growth
Operational excellence

LINK TO KPIS

Financial: 7, 8, 9

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Annual Report and Accounts 2021

Contents

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

5. Customer payment default

6. Cyber security

PRINCIPAL RISK
Covid-19 and its impact on the economy has
resulted in an increase in customers defaulting
on their rental payments. A continued
economic downturn could result in further
pressure on rent collection figures with a
prolonged period of companies failing leading
to a decline in occupancy and increase in
office vacancies.

RISK IMPACT
– Negative cash flow and increasing

interest costs

– Breach of financial covenants

MITIGATION
Rent collections have been impacted during
the year as a result of the moratorium put in
place by the Government which limits the use
of some debt recovery methods.

The impact has been mitigated by strong credit
control processes in place and an experienced
team of credit controllers, able to make quick
decisions and negotiate with customers for
payment. In addition, we hold a three month
deposit for the majority of customers.

Centre staff maintain relationships with
customers and can identify early signs of
potential issues.

IMPACT

High

PROBABILITY (POST-MITIGATION)

Possible

CHANGE FROM LAST YEAR
New risk

RISK APPETITE

Low

LINK TO STRATEGY

Operational excellence

LINK TO KPIS

Financial: 1, 2, 4, 8, 9

PRINCIPAL RISK
A cyber attack could lead to a loss of access to
Workspace systems or a network disruption for
a prolonged period of time, this could damage
Workspace reputation and inhibit our ability to
run the business.

MITIGATION
Cyber security risk is managed using a
mitigation framework comprising network
security, IT security policies and third party risk
assessments. Controls are regularly reviewed
and updated and include technology such as
next generation firewalls, multi layered access
control through to people solutions such as user
awareness training and mock-phishing emails.

Assurance of the frameworks performance
is gained through an independent maturity
assessment, penetration testing and network
vulnerability testing, all performed annually.

IMPACT

High

PROBABILITY (POST-MITIGATION)

Unlikely

CHANGE FROM LAST YEAR
No change

RISK APPETITE

Low

LINK TO STRATEGY

Operational excellence

LINK TO KPIS

Financial: 2, 4, 8, 9
Non-financial: 4, 5

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Annual Report and Accounts 2021

Contents

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

7. Resourcing

PRINCIPAL RISK
Ineffective succession planning, recruitment
and people management could lead to
limited resourcing levels and a shortage
of suitably skilled individuals to be able to
achieve Workspace objectives and grow the
business. A failure to have in place adequate
resourcing may also result in stretch of existing
management and a decline in efficiency.

RISK IMPACT
– Increased costs from high staff turnover
– Delay to growth plans
– Reputational damage

MITIGATION
We have a robust recruitment process to
attract new joiners and established interview
and evaluation processes with a view to
ensuring a good fit with the required skill set
and our valued corporate culture. Various
incentive schemes align employee objectives
with the strategic objectives of the Group
to motivate employees to work in the best
interests of the Group and its stakeholders.
This is supported by a robust appraisal and
review process for all employees.

Our HR and Support Services teams run a
detailed training and development programme
designed to ensure employees are supported
and encouraged to progress with learning
and study opportunities. The HR function was
this year strengthened by the newly created
appointment of a Head of People who will
coordinate all activities to attract and retain
talented employees.

IMPACT

High

PROBABILITY (POST-MITIGATION)

Low

CHANGE FROM LAST YEAR
No change

RISK APPETITE

Medium

LINK TO STRATEGY

Operational excellence
Doing the Right Thing

LINK TO KPIS

Financial: 1, 2, 4, 5, 6, 8, 9
Non-financial: 1, 2, 3, 4, 5, 6

Company
values

We have a strong internal
culture which encourages
independent thought and
initiative which is articulated
in our four key values:

Know your stuff

Show we care

Find a way

Be a little bit crazy

A new programme is being
introduced to identify and
develop employees with
talent to ensure there is a
pipeline of employees with
the potential to take on
leadership roles.

See page 17

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Contents

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

8. Third party relationships

9. Regulatory

IMPACT
Poor performance from one of Workspace’s
key contractors or third party partners could
result in an interruption to or reduction in
quality of our service offering to customers
or could lead to significant disruptions and
delays in any refurbishment or redevelopment
projects.

RISK IMPACT
– Decline in customer confidence
– Increase project or operational costs
– Fall in customer demand

IMPACT

High

PROBABILITY (POST-MITIGATION)

Low

CHANGE FROM LAST YEAR
New risk

MITIGATION
Workspace has in place a robust tender and
selection process for key contractors and
partners. Contracts contain service level
agreements which are monitored regularly and
actions taken in the case of underperformance.

RISK APPETITE

Low

For key services, Workspace maintains
relationships with alternative providers so
that other solutions would be available if the
main contractor or third party was unable to
continue providing their services. Processes
are in place for identifying key suppliers and
understanding any specific risks that require
further mitigation.

During the year, a decision was taken to
become London Living Wage compliant
for all contractors by April 2022.

LINK TO STRATEGY

Customer-led growth
Operational excellence
Doing the Right Thing

LINK TO KPIS

Financial: 1, 2, 4, 5, 6, 8, 9
Non-financial: 5

PRINCIPAL RISK
A failure to keep up to date and plan for
changing regulations in key areas such as
health and safety or sustainability could lead
to fines or reputational damage

RISK IMPACT
– Increased costs
– Reputational damage

MITIGATION
Health and safety is one of our primary
concerns, with strong leadership promoting
a culture of awareness throughout the
business. We have well-developed policies and
procedures in place to help ensure that any
workers, employees or visitors on site comply
with strict safety guidelines and we work with
well-respected suppliers who share our high
quality standards in health and safety.

Health and safety management systems are
reviewed and updated in line with changing
regulation and regular audits are undertaken to
identify any potential improvements.

Sustainability requirements have an
increasing importance for the Group and
it is a responsibility we take seriously. We
have committed to a Carbon Zero target of
2030 and we are implementing the TCFD
recommendations. Refer to pages 86 to 96
for further details of our approach to climate
change risk management.

IMPACT

Medium

PROBABILITY (POST-MITIGATION)

Low

CHANGE FROM LAST YEAR
No change

RISK APPETITE

Low

LINK TO STRATEGY

Operational excellence
Doing the Right Thing

LINK TO KPIS

Financial: 2, 4, 9
Non-financial: 4, 5

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BUSINESS REVIEW

AT A GLANCE

Contents

Total rent roll

£103.9m
£38.7m
£2.3bn

Trading profit after interest

Property valuation

PROPERTIES FEATURED IN THE BUSINESS REVIEW:

Lock Studios, Bow
Completed mixed-use redevelopment

Pall Mall Deposit, Ladbroke Grove
Refurbishment underway

Mirror Works, Stratford
Mixed-use redevelopment underway

Lock Studios, Bow

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BUSINESS REVIEW CONTINUED

CUSTOMER ACTIVITY
Covid-19 restrictions had a significant impact
on new customer activity during the year with
enquiries averaging 739 per month (2020:
1,087), viewings averaging 328 per month
(2020: 675) and lettings averaging 96 per
month (2020: 121).

On a more positive note, new customer
demand picked up strongly through the fourth
quarter, despite the third lockdown, reaching
1,172 enquiries and 150 lettings in March 2021.

Momentum has continued into the first quarter
of the new financial year with 939 enquiries
and 612 viewings in April 2021.

As Government restrictions have eased,
customer utilisation of our business centres
has also improved, reaching 20% of pre-Covid
levels by the end of March and 33% by the end
of May.

Enquiries
Viewings
Lettings

Monthly Activity

Monthly Average

31 Mar
2021
1,172
535
150

28 Feb
2021
839
404
113

31 Jan
2021
720
300
71

Q4
20/21
910
413
111

Q3
20/21
672
322
109

Q2
20/21
869
435
119

Q1
20/21
506
142
43

FY
19/20
1,087
675
121

Contents

Like-for-like Portfolio
The like-for-like portfolio represents 82% of the
total rent roll as at 31 March 2021. It comprises
38 properties with stabilised occupancy,
excluding buildings impacted by significant
refurbishment or redevelopment activity
or contracted for sale. Like-for-like trends
reported for previous financial years are not
restated for the property transfers made in the
current financial year.

The net result of customers joining, resizing
and leaving during the year has been a 11.7%
reduction in like-for-like occupancy to 81.6%.
We have, however, seen a slowing decline in
occupancy in recent months with occupancy
stabilising by the end of the fourth quarter of
the year.

RENT ROLL
Total rent roll, representing the total annualised
net rental income at a given date, was down
21.7% to £103.9m at March 2021, with overall
occupancy reducing from 87.0% to 77.8%.

Total Rent Roll
At 31 March 2020
New customers
Retained (renewals, expansions,
contractions)
Leavers
Other
At 31 March 2021

£m
132.8
7.2

(8.4)
(26.6)
(1.1)
103.9

Over the past year, we have worked closely
with our customers to retain as many as
possible, including resizing or relocating them
where appropriate. Unfortunately for some
customers this was not possible, and they
chose to vacate. We also worked hard to
capture new demand with around 600 new
customers joining us during the year, adding
£7.2m to the rent roll. Rent roll movement by
property category is summarised below.

Total Rent Roll
At 31 March 2020
Like-for-like portfolio
Completed projects
Projects underway and design stage
Disposals/other
At 31 March 2021

£m
132.8
(26.7)
0.4
(2.2)
(0.4)
103.9

The total estimated rental value (ERV) of the
portfolio, comprising the ERV of the like-for-
like portfolio, and those properties currently
undergoing refurbishment or redevelopment
(but only including properties at the design
stage at their current rent roll and occupancy)
is £151.7m.

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BUSINESS REVIEW CONTINUED

Contents

Like-for-like
Occupancy
Occupancy Change*
Rent per sq. ft.
Rent per sq. ft. change
Rent Roll
Rent Roll change

* Absolute change

31 Mar 2021
81.6%
(0.5)%
£36.57
(4.9%)
£85.1m
(5.2)%

Quarter Ended

31 Dec 2020
82.1%
(3.4)%
£38.46
(5.3)%
£89.8m
(9.1)%

30 Sep 2020
85.5%
(4.6)%
£40.61
(1.3)%
£98.8m
(6.6)%

30 Jun 2020
90.1%
(3.2)%
£41.16
(2.0)%
£105.8m
(5.3)%

We continued to price our offer competitively
to capture demand including, on a case by
case basis, offering short-term lease incentives
where customers are planning a delayed return
to their office. We saw a 12.9% decrease in rent
per sq. ft. to £36.57 over the year. Around half
the fall of 4.9% in the final quarter results from
short term lease incentives which will unwind in
the current financial year.

The combined impact of the reduction in like-
for-like occupancy and rent per sq. ft. in the
year was a 23.9% fall in like-for-like rent roll, to
£85.1m.

If all the like-for-like properties were at 90%
occupancy at the CBRE estimated rental
values at 31 March 2021, the rent roll would be
£107.9m, £22.8m higher than the actual cash
rent roll at 31 March 2021.

Completed Projects
There are now a total of seven projects in the
completed projects category. Rent roll has
remained broadly flat, decreasing by just £0.1m
in the year to £5.6m, with overall occupancy at
62.6%.

This category includes Mare Street, Hackney,
and Lock Studios, Bow, which both opened in
June 2020 providing a combined 94,000 sq.
ft. of new space as well as Wenlock Studios,
Old Street, which completed in December

2020 providing 11,000 sq. ft. of upgraded
space and Parkhall Business Centre, Dulwich,
which completed in February 2021 providing
78,000 sq. ft. of upgraded space.

Excluding the most recently completed
projects at Parkhall Studios and Wenlock
Studios, rent roll across the other completed
projects increased by £0.4m in the year with
Lock Studios letting up particularly well (over
50% let as at 31 March 2021).

If the buildings in this category were all at
90% occupancy at the CBRE estimated rental
values at 31 March 2021, the rent roll would be
£10.6m, an uplift of £5.0m.

Projects Underway – Refurbishments
We are currently underway on four
refurbishment projects that will deliver 214,000
sq. ft. of new and upgraded space. As at
31 March 2021, rent roll was £3.2m, down £2.1m
in the year. We expect the refurbishment of Pall
Mall Deposit to complete during the current
year delivering 59,000 sq. ft. of new and
upgraded space.

Assuming 90% occupancy at the CBRE
estimated rental values at 31 March 2021, the
rent roll at these four buildings once they are
completed would be £7.6m, an uplift of £4.4m.

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BUSINESS REVIEW CONTINUED

Projects Underway – Redevelopments
There are currently two mixed-use
redevelopment projects underway providing
58,000 sq. ft. of net lettable space, with the
first delivering 17,000 sq. ft. of additional space
at The Light Bulb, Wandsworth, completing
in the first half of the current financial year,
followed by a new 41,000 sq. ft. business
centre in Stratford, to be named Mirror Works
(formerly Marshgate) opening in the second
half of the year.

Assuming 90% occupancy at the CBRE
estimated rental values at 31 March 2021, the
rent roll at the two new business centres would
be £1.3m.

Projects at Design Stage
These are properties where we are planning a
refurbishment or redevelopment that has not
yet commenced. In a number of cases this is
because we are awaiting planning consent. The
rent roll at these properties at 31 March 2021
was £10.1m, unchanged in the year.

Contents

PROFIT PERFORMANCE
Trading profit after interest for the year is down
52% (£42.5m) on the prior year to £38.7m.

There was a £14.8m (12.3%) decrease in
underlying net rental income to £105.5m, as
detailed below:

£m
Net rental income
Administrative expenses
Net finance costs
Trading profit after interest

31 Mar
2021
81.5
(19.0)
(23.8)
38.7

31 Mar
2020
122.0
(17.7)
(23.3)
81.0

Net rental income was down 33.2% (£40.5m) in
total to £81.5m, as detailed below:

£m
Underlying net rental
income
Rent discounts and
waivers
Expected credit losses
Disposals
Net rental income

31 Mar
2021

31 Mar
2020

105.5

120.3

(19.9)
(4.2)
0.1
81.5

–
(0.4)
2.1
122.0

Net rental income was significantly reduced by
rent discounts and waivers given to customers,
predominantly in respect of the first quarter
when we offered a 50% discount to all our
business centre customers.

Although we hold rent deposits for the
majority of our customers, the extension of
Government restrictions on rent collection has
impeded efforts to collect rent from a number
of our customers, resulting in a significant
charge for expected credit losses of £4.2m, an
increase of £3.8m on the prior year.

£m
Rental income
Unrecovered service
charges
Empty rates and other
non-recoverable costs
Services, fees,
commissions and sundry
income
Underlying net rental
income

31 Mar
2021
115.4

31 Mar
2020
128.4

(2.1)

(3.3)

(7.1)

(6.3)

(0.7)

1.5

105.5

120.3

The reduction in rental income of £13.0m
has been driven by the fall in rent roll as
noted above. Our focus on cost control and
reduced numbers of customers in our centres
during the lockdown periods have enabled
us to reduce unrecovered service charges by
£1.2m. Lower average occupancy over the
year has, however, resulted in an increase in
empty rates and non-recoverable costs of
£0.8m. Services, fees, commissions and sundry
income have reduced by £2.2m due to both
the fall in occupancy and the lower utilisation
of our buildings, leading to a reduced ability to
generate ancillary income.

Administrative expenses increased by 7.3%
(£1.3m) to £19.0m reflecting a full year of
our increased investment in our sales and
marketing capability. The prior year benefited
from a short-term saving in executive costs
following the stepping down of the previous
CEO in May 2019. Discretionary costs and
headcount remain under tight control.

Net finance costs increased by 2.1% (£0.5m) in
the year, with a slight increase in the average
interest rate from 3.7% to 3.8%, reflecting a
reduction in interest capitalisation due to a
lower level of refurbishment activity during
the year.

Loss before tax was £235.7m compared to a
profit before tax of £72.5m in the prior year.

£m
Trading profit after interest
Change in fair value of
investment properties
Loss on sale of investment
properties
Exceptional finance costs
Other items
(Loss)/profit before tax
Adjusted underlying
earnings per share

31 Mar
2021
38.7

31 Mar
2020
81.0

(257.7)

(7.5)

(0.1)
(16.4)
(0.2)
(235.7)

(0.8)
–
(0.2)
72.5

21.3p

44.6p

The deficit in the property revaluation
increased from £7.5m in the prior year to a
deficit of £257.7m in the current year.

Exceptional finance costs relate to the
refinancing of $100m and £84m of private
placement notes due 2030 which were
repaid early in April 2021 after notice was
given in March 2021. The costs included a
£16.3m premium on redemption and £0.1m of
unamortised finance costs.

Adjusted underlying earnings per share, based
on EPRA earnings adjusted for non-trading
items and calculated on a diluted share basis, is
down 52% to 21.3p.

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Like-for-like
Refurbishments
Redevelopments

WOOD GREEN

ZONE 3

HAMPSTEAD
HEATH

HAMPSTEAD

0
1
A

HIGHBURY &
ISLINGTON

SHOREDITCH

STRATFORD

ZONE 2

LADBROKE
GROVE

CAMDEN

REGENT’S
PARK

A40
A40

NOTTING
HILL

SHEPHERD’S
BUSH

ZONE 1

A 4 0
A 4 0

PADDINGTON
PADDINGTON

HYDE PARK

KING’S
KING’S
CROSS
CROSS

SOHO

HACKNEY

BETHNAL
GREEN

A 1

OLD
STREET

FARRINGDON

A 1

THE
CITY

LIVERPOOL
STREET

CANARY
WHARF

CHISWICK

HAMMERSMITH

WESTMINSTER

WATERLOO

LONDON
BRIDGE

BERMONDSEY

VAUXHALL

KENNINGTON

DEPTFORD

A 2

BATTERSEA
PARK

BATTERSEA

A 3

3
2
A

A205

WEST
WEST
DULWICH
DULWICH

WANDSWORTH

A
A

EARLSFIELD

RICHMOND
PARK

A
A

Like-for-like
Like-for-like

Refurbishments
Refurbishments

Redevelopments
Redevelopments

RAYNES PARK

Contents

A summary of the full year valuation and
revaluation movement by property type is set
out below:

£m
Like-for-like Properties
Completed Projects
Refurbishments
Redevelopments
Total

Valuation
1,790
181
256
97
2,324

Uplift/
deficit
(205)
(8)
(41)
(4)
(258)

Like-for-like Properties
There was a 10.3% (£205m) underlying
decrease in the valuation of like-for-like
properties to £1,790m. This is driven by a
9.8% decrease in ERV per sq. ft. reflecting
price reductions we have seen on lettings
and renewals completed during the year. The
equivalent yield of the like-for-like portfolio is
unchanged at 5.8%.

ERV per sq. ft.
Rent per sq. ft.
Equivalent Yield
Net Initial Yield
Capital Value
per sq. ft.

31 Mar
2021
£42.07
£36.57
5.8%
4.2%

31 Mar
2020
£46.65
£41.98
5.8%
5.1%

Change
-9.8%
-12.9%
–
-0.9%

£628

£696

-9.8%

DIVIDEND
Our dividend policy is based on trading
profit after interest, taking into account our
investment and acquisition plans and the
distribution requirements that we have as a
REIT, with our aim being to ensure the dividend
per share is covered at least 1.2 times by
adjusted underlying earnings per share.

At the half year we decided to defer a decision
on the payment of the dividend as the UK was
entering another month of lockdown at that
time and there was heightened uncertainty.
However, in line with our policy, the Board
is now recommending a final dividend of
17.75p per share (2020: 24.49p) to be paid on
6 August 2021 to shareholders on the register
at 2 July 2021. The dividend will be paid as a
Property Income Distribution and fully meets
the REIT distribution requirement for the year
to 31 March 2021, with a dividend cover at 1.2
times adjusted underlying earnings per share.

PROPERTY VALUATION
At 31 March 2021, our property portfolio was
independently valued by CBRE at £2,324m,
an underlying decrease of 10.0% (£258m) in
the year. The main movements in the valuation
over the year are set out below:

Valuation at 31 March 2020
Revaluation deficit
Capital expenditure
Capital receipts
Disposals
Valuation at 31 March 2021

£m
2,574
(258)
24
(5)
(11)
2,324

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BUSINESS REVIEW CONTINUED

2.1 Landscape Masterplan Ground Floor

Contents

RIVERSIDE, WANDSWORTH: LANDSCAPE REPORT PLANIT-IE

King George’s Park

REFURBISHMENT ACTIVITY
A summary of the status of the refurbishment
pipeline at 31 March 2021 is set out below:

Riverside Gardens Wandle North Passage

KEY

Bridge Landing

Pocket Park

Streetscape & Arrival Plaza

Wandle South Passage

Underway
Design stage
Design stage (without planning)

Bendon Valley

Haldane Place

e
n
a
L
t
t
a
r
r
a
G

In May 2021, we received planning permission
for the re-designation of land use for a major
scheme at Kennington Park. The existing
91,000 sq. ft. of low-grade space situated to
the south and east of the Kennington Park
campus will be replaced with 200,000 sq. ft.
of high specification office space.

PAGE 11

Number
4
5
2

Capex
spent
£18m
–
–

Capex to
spend
£14m
£165m
£130m

Upgraded and new
space (sq. ft.)
214,000
510,000
320,000

Completed Projects
There was an underlying decrease of 4.2%
(£8m) in the value of the seven completed
projects to £181m. The overall valuation metrics
for completed projects are set out below:

ERV per sq. ft.
Rent per sq. ft.
Equivalent Yield
Net Initial Yield
Capital Value per sq. ft.

31 Mar
2021
£30.55
£23.15
5.7%
2.8%
£469

The major movements within this category
were a decrease of £5.2m at Mare Street
Studios, Hackney, which is in the early stages
of letting up after being launched in June 2020
and a decrease of £4.2m at 160 Fleet Street
reflecting a reduction in pricing expectations
based on recent lettings.

Current Refurbishments and Redevelopments
There was an underlying reduction of
13.8% (£41m) in the value of our current
refurbishments to £256m and a reduction
of 4.0% (£4m) in the value of our current
redevelopments to £97m.

The most significant movements in this
category are a decrease of £8.8m at Fitzroy
Street, Fitzrovia, where the sole occupier, as
expected, has exercised their break ahead
of our planned extensive refurbishment, a
decrease of £7.9m at Westbourne Studios
where, again as expected, a large customer
has now vacated ahead of refurbishment and a
reduction of £7.7m at Biscuit Factory (J Block),
Bermondsey, reflecting lower occupancy and
income expectations.

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Q&A with the Executive Team

RICHARD SWAYNE
INVESTMENT DIRECTOR

Contents

Q Workspace hasn’t bought any
new properties for some time.
Have you been holding back on
investment in acquisitions?

A The last two years have been

characterised by market uncertainty,
with Brexit and the General Election,
followed by the onslaught of the
Covid-19 pandemic.

We have remained open to acquisitions
through that time but we do have strict
returns criteria and the organic growth
opportunity from our project pipeline
keeps us disciplined when it comes to
capex on acquisitions.

We are currently monitoring a very
tight market, with limited stock and
competitive buyers. With our 30+ year
history in London, we have a long-held
database of properties that would work
for us and we are well positioned, with
a strong balance sheet, to move quickly
as opportunities arise.

We are well positioned,
with a strong balance
sheet, to move quickly
as opportunities arise.

Q Where do you see the best value

opportunities in the next year or so?

A We would look at the right properties in
zones 1, 2 or 3. But at the moment, we
are seeing particular value outside the
core, central London markets as there
is increased demand for flexible office
space across London.

Following the pandemic, we are
tracking certain opportunities where
owner occupiers are reviewing their
space requirements, as well as passive
owners who are facing lease expiries
with occupiers who have changed their
mind about renewing.

Richard joined the
Executive Team in 2020
and is responsible for
Workspace’s acquisitions
and disposals.

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BUSINESS REVIEW CONTINUED

Contents

REDEVELOPMENT ACTIVITY
Many of our properties are in areas where there
is strong demand for mixed-use redevelopment.
Our model is to use our expertise, knowledge
and local relationships to obtain a mixed-
use planning consent and then agree terms
with a residential developer to undertake the
redevelopment and construction at no cost
and limited risk to Workspace. We receive
back a combination of cash, new commercial
space and overage, in return for the sale of the
residential scheme to the developer.

A summary of the status of the redevelopment
pipeline at 31 March 2021 is set out below.

In return for the sale of the residential schemes
at Marshgate, Stratford, and Light Bulb (phase
2), Wandsworth, the two redevelopment
schemes underway, we have received £24m in

cash and two new commercial buildings, which
will be delivered shortly. The new building at
Marshgate, a 41,000 sq. ft. business centre, will
be named Mirror Works.

In June 2020, we were granted planning
consent for a significant mixed-use
redevelopment project in Wandsworth. The
5.4 acre Riverside site currently comprises
145,000 sq. ft. of low quality office, leisure and
light industrial space, with a rent roll of £2.0m.
The planning consent is for a new 104,000 sq.
ft. business centre and 65,000 sq. ft. of new
light industrial space, as well as 402 residential
apartments, including 35% affordable housing.

There are now five schemes at the design
stage that have obtained mixed-use planning
consents but are not yet contracted for sale.

Underway
Design stage

No. of
properties
2
5

Residential
units
277
1,210

Cash
received
£24m
–

New commercial
space (sq. ft.)
58,000
289,000

ACQUISITIONS AND DISPOSALS
No acquisitions were made in the year,
however, we continue to track opportunities
across London and remain disciplined in our
returns criteria.

In September 2020, we completed the sale of
Bow Exchange, Bow, for £11.0m, in line with the
31 March 2020 valuation, at a capital value of
£298 per sq. ft.

CASH FLOW
The Group generates strong operating cash
flow in line with trading profit. A summary of
cash flows in the half year are set out below.

There is a reconciliation of net debt in note
16(b) to the financial statements.

Rent collection for the year was robust, despite
the Government restrictions on rent collection
measures which have been in place. Overall,
95% of rent due (after discounts and deferrals
given to customers largely in respect of the
first quarter) has been collected, including 93%
of rent due for the fourth quarter of 2020/21
collected to date.

We have to date collected 91% of rent due for
the first quarter of 2021/22 which is ahead of
the level of rents collected at the same point in
the fourth quarter of 2020/21.

The majority of the amounts still outstanding,
which include £1.1m of agreed rent deferrals,
are covered by rent deposits or by the
provision for doubtful debts.

£m
Net cash from operations after interest
Dividends paid
Capital expenditure
Property disposals and cash receipts
Capital receipts
Finance costs for new/amended borrowing facilities
Net movement
Opening debt (net of cash)
Closing debt (net of cash)

31 Mar
2021
39
(46)
(26)
11
–
(2)
(24)
(541)
(565)

31 Mar
2020
85
(61)
(62)
65
12
–
39
(580)
(541)

Rent collected as proportion of rent receivable
after discounts and deferrals
Rent collected as proportion of gross rents

97%
48%

98%
86%

95%
94%

93%
92%

95%
79%

FY20/21

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Workspace Group PLC
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BUSINESS REVIEW CONTINUED

24%

Loan to value as at
31 March 2021

Contents

At 31 March 2021, the average interest cost
of our fixed rate private placement notes was
4.1%. Our revolver bank facilities are provided
at a floating rate of 1.65% over LIBOR.

At 31 March 2021, loan to value (LTV) was
24% (31 March 2020: 21%) and interest cover,
based on net rental income and interest paid
(excluding exceptional refinancing costs), was
3.8 times (31 March 2020: 5.2), providing good
headroom on all facility covenants.

In March 2021, we gave notice to prepay
£148.5m of our fixed rate private placement
notes due June 2023 on 30 April 2021. The
refinancing reduces the average cost of debt
to 3.1% and average debt maturity increases to
5.3 years on a proforma basis. Following the
refinancing, 71% of our facilities are at fixed
rates, representing 100% of our borrowings
on a drawn basis, LTV remains unchanged at
24% and undrawn revolver facilities and cash
reduces to £269m on a proforma basis.

NET ASSETS
Net assets decreased in the year by £279m
to £1,720m. EPRA net tangible assets (NTA)
per share at 31 March 2021 was down 13.8%
(£1.50) to £9.38 and EPRA net reinstatement
value (NRV) per share was down 13.9% (£1.66)
to £10.26:

At 31 March 2020
Adjusted trading profit
after interest
Property valuation deficit
Purchasers costs
Dividends paid
Exceptional finance costs
Other
At 31 March 2021

EPRA NRV
per share
£
11.92

EPRA NTA
per share
£
10.88

0.21
(1.42)
(0.16)
(0.24)
(0.09)
0.04
10.26

0.21
(1.42)
–
(0.24)
(0.09)
0.04
9.38

The calculation of EPRA NTA and NRV per
share measures are set out in note 9 of the
financial statements.

FINANCING
As at 31 March 2021, the Group had £183.6m
of cash and £250.0m of undrawn facilities:

Drawn
amount
£m

Facility
£m

Maturity

Private placement
notes
Green bond
Bank facilities
Total

448.5
300.0 300.0

448.5 2023-29
2028
250.0 2022-23
998.5

–
748.5

All facilities are provided on an unsecured basis
with an average maturity of 4.8 years (31 March
2020: 4.5 years).

In February 2021 we extended the term of
£167m of our revolver bank facilities by one
year to June 2023.

In March 2021 we issued a sterling-denominated
senior unsecured guaranteed green bond in
an aggregate principal amount of £300m for
a term of seven years, which bears interest
at a rate of 2.25 per cent per annum. The
green bond was issued in connection with the
Company’s new Green Finance Framework,
in line with Workspace’s ESG ‘Doing the Right
Thing’ strategy and our recently published net
zero carbon pathway.

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Contents

OUTLOOK
The strong pick-up in new customer activity
that we saw through the fourth quarter
has continued into the new financial year.
Assuming the lifting of Covid-19 restrictions
continues as planned and there are no further
lockdowns, we expect to see continued
momentum on new lettings and the rate of
customers leaving and downsizing returning to
normal levels.

Looking at the financial outlook for FY 2021/22,
the following should be taken into account:
– Our focus in the coming year will be on

regaining occupancy and we will continue
to price to the market until we see sustained
improvement in occupancy levels

– Net rental income will lag the improvement

in rent roll as occupancy recovers

– There will also be a drag on income from
unrecovered service charges and other
occupancy-related costs, such as empty
rates

– Capex will increase as we continue to

progress the project pipeline. This includes
Arup’s vacation of Fitzroy Street, Fitzrovia,
in June 2021 ahead of the planned
refurbishment

– We expect credit losses to reduce to

more normal levels once the Government
moratorium on rent collection is lifted

– The successful refinancing has resulted in a

lower cost of debt

KEY PROPERTY STATISTICS

Workspace Group Portfolio
CBRE property valuation
Number of locations
Lettable floorspace (million sq. ft.)
Number of lettable units
Rent roll of occupied units
Average rent per sq. ft.
Overall occupancy
Like-for-like number of properties
Like-for-like lettable floor space (million sq. ft.)
Like-for-like rent roll growth
Like-for-like rent per sq. ft. growth
Like-for-like occupancy movement

Half Year ended

31 Mar
2021

30 Sep
2020

31 Mar
2020

30 Sep
2019

£2,324m £2,450m
58
3.9
4,147
£118.2m
£37.15
81.1%
38
2.8
(11.6)%
(3.3)%
(7.8)%

58
3.9
4,196
£103.9m
£33.90
77.8%
38
2.8
(13.9)%
(9.9)%
(3.9)%

£2,574m
59
3.9
4,009
£132.8m
£39.18
87.0%
29
2.2
1.2%
0.3%
0.9%

£2,682m
64
4.0
4,969
£130.4m
£38.06
86.3%
28
2.2
0.7%
(1.0)%
1.7%

1. The like-for-like category has been restated in the current financial year for the following:

– The transfer in of Goswell Road, Cannon Wharf, Ink Rooms, 60 Gray’s Inn Road, The Light Box, Edinburgh House, The Frames,

The Leather Market, China Works and Fuel Tank from the completed projects category

– The transfer in of Canalot Studios from the refurbishment projects category The transfer in of Poplar Business Park from

the redevelopment projects category

– The transfer out of Westbourne Studios to the refurbishment projects category The transfer out of Mallard Place to the

redevelopment projects category

2. Like-for-like statistics for prior years are not restated for the changes made to the like-for-like property portfolio in the current

financial year.

3. Overall rent per sq. ft. and occupancy statistics include the lettable area at like-for-like properties and all refurbishment and
redevelopment projects, including those projects recently completed and also properties where we are in the process of
obtaining vacant possession.

The Strategic Report on pages 1 to 98 was approved by the Board of Directors on 2 June 2021
and signed on its behalf by:

Graham Clemett
Chief Executive Officer

Dave Benson
Chief Financial Officer

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COMPLIANCE STATEMENTS

Contents

Going concern

Viability statement

The Group’s activities, strategy and performance are explained
in the Strategic Report on pages 2 to 98.

Further detail on the financial performance and financial
position of the Group is provided in the financial statements on
pages 210 to 235.

The Directors, have conducted an extensive review of the
appropriateness of adopting the going concern basis in light of
the Covid-19 pandemic. More details can be found on page 213.
Following this review and having made appropriate enquiries,
the Directors have a reasonable expectation that the Group
and the Company have adequate resources and sufficient
headroom on the Group’s bank loan facilities to continue in
operational existence. For this reason, the Directors believe that
it is appropriate to continue to adopt the Going Concern basis in
preparing the Group’s accounts.

Assessment of prospects
The Group assesses its prospects primarily through the annual
Strategic Review process which involves a debate of the
Group’s strategy and business model, consideration of the
Group’s principal risks and a review of the Group’s five-year
plan. Particular attention is given to existing refurbishment
and redevelopment commitments, long-term financing
arrangements, compliance with financing and REIT covenants
and existing macroeconomic factors.

Assessment of time period
The Board has selected a review period of five years for the
following reasons:
a) The Group’s strategic review covers a five-year period.
b) Our current project pipeline spans five years, covering the
time for the currently planned major refurbishments and
redevelopments to progress from initiation to completion.
c) The average period to maturity of the Group’s committed

facilities is 4.8 years.

The most recent strategy day was held in September 2020
and the Board reviewed the business plan for the five years to
31 March 2025.

In light of the extended impact of Covid-19 on the conditions
the Group is operating in, consideration has also been given
to a number of downside scenarios covering the period to
31 March 2026.

The scenarios modelled include a severe but realistically
possible scenario based on the following key assumptions:
– A gradual recovery period of two years from summer 2021 to

return to 90% occupancy

– New lettings continue to be below the average price per sq.
ft. of vacating customers until like-for-like occupancy levels
reach 90%

– Continued higher levels of counterparty risk, with bad debt

significantly higher than pre-pandemic levels

– A further two months of Government restrictions on public

movement in the winter of 2021 (‘lockdown’).

The Group’s activities, strategy and performance are explained
in the Strategic Report on pages 2 to 98, including a description
of the Group’s strategy and business model on pages 29 to 33
and 11 to 19.

Although financial performance is assessed over a period of five
years, the strategy and business model are considered with the
longer-term success of the Group in mind. The Directors believe
they have no reason to expect a significant adverse change in
the Group’s viability immediately following the end of the five-
year assessment period.

Assessment of viability
The Board has considered the key risks and mitigating factors
that could impact the Group, details of which can be found on
pages 63 to 70. Those risks that could have an impact on the
ongoing success of the Group’s strategy, particularly in light of
Covid-19, were identified and the resilience of the Group to the
impact of these risks in severe, yet plausible scenarios has been
evaluated.

Sensitivity analyses have been prepared to understand
the impact of the identified risks on solvency and liquidity.
The specific risks which were evaluated are shown in the
following table.

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COMPLIANCE STATEMENTS CONTINUED

VIABILITY STATEMENT CONTINUED

Risk sensitivity analyses

SPECIFIC RISK

RISK CATEGORY

SENSITIVITY ANALYSIS

Demand for space falls dramatically impacting
occupancy and pricing levels, or customer
defaults increase leading to a breach of loan
covenants.

– Customer demand.
– Valuation.

Net rental income would need to reduce by 55%
compared to the year to 31 March 2021. This represents
an additional 54% reduction from the net rental income
included in the severe scenario modelled.

Property values are adversely impacted by
the uncertainty in the economy leading to a
breach of covenants.

– Valuation.

At the point in the business plan that LTV is at its highest,
the property valuation would need to fall by 50%
compared to the valuation as at 31 March 2021.

Contents

Section 172(1)
statement

Our Section 172(1) Statement
can be found on page 122.

The model assumes that the Group’s RCF will reduce to
£167m in June 2022. Under the scenario modelled, the
Group would need to either refinance this remaining
facility when it expires in June 2023 or put in place other
mitigating strategies to make full repayment of this
facility.

Conclusion
The sensitivity and stress analyses outlined above indicate that
the Group would have adequate means to maintain headroom in
its facilities and covenants to continue operations for the period
under review. On this basis, the Directors have a reasonable
expectation that the Group will be able to continue in operation
and meet its liabilities as they fall due over the five-year period
stated above.

Changes in the economic and regulatory UK
environment impact the availability and pricing
of debt.

– Financing.

The Group benefits from a freehold property portfolio and a
flexible business model that allows the business to adapt to
changing requirements of its customer base. This, coupled with
a strong balance sheet, means the Company can withstand a
significant downturn in the economy and demand.

In the scenarios tested, the most significant impact on the
viability of the Group would be to the level of available facilities
resulting from an inability to refinance existing facilities.
To mitigate this risk, the Group regularly reviews funding
requirements and maintains a close relationship with existing
and potential funding partners to facilitate the continuing
availability of debt finance.

Also, the maturity of debt facilities is spread over a number of
years to avoid a concentration of risk in one period and gearing
is relatively low with LTV of 24% as at 31 March 2021.

There are a number of mitigating factors that were not
considered in the scenarios tested but which could be actioned:
– Disposal of assets.
– Cancellation or significant reduction in dividend.
– Reduction in refurbishment programme.

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COMPLIANCE STATEMENTS CONTINUED

Contents

Non-financial information statement

The table below, and the information it refers to, sets out our position on non-financial reporting requirements in accordance with Sections 414CA and 414CB of the Companies Act 2006 as well as
other key compliance areas. The time periods for reporting on the matters set out below have been informed by applicable law and prevailing market practice, taking into account the Group’s particular
circumstances and the nature of its business. The description of our business model can be found on pages 11 to 19 and the description of our non-financial key performance indicators can be found on
pages 61 to 62.

POLICIES AND DUE DILIGENCE

OUTCOMES OF POLICIES AND IMPACTS OF ACTIVITIES

RELATED PRINCIPAL RISKS (PAGES 63 TO 70)

ENVIRONMENTAL
MATTERS

– Our Doing the Right Thing strategy states our commitment to operating
responsibly in all our dealings with our stakeholders. This is supported by
an Environmental Policy and a Climate Change Policy which set out our
objectives and commitment to a co-ordinated approach to improving the
overall environmental performance of our portfolio.

– See pages 19, 24, 28, 32, 37 to 44 and 86 to 98
for details of our commitment to environmental
matters, including our net zero carbon pathway,
the launch of our green bond and our Green
Finance Framework, and our TCFD framework.

While environmental matters are not
deemed a principal risk for the Group, see
pages 64 and 90 to 95 for details of how
we manage climate change risk in our
business.

– Our net zero carbon pathway sets out our roadmap towards reaching net

zero carbon by 2030.

– We disclose our climate-related risks and opportunities management

processes in line with the TCFD recommendations.

SOCIAL MATTERS

– Our Doing the Right Thing strategy sets out our approach to supporting

EMPLOYEES

our employees, customers and suppliers.

– We have updated our social impact programme to further demonstrate
our commitment to supporting communities in need across London.
– We pay our direct employees London Living Wage and have committed
to bring all third-party contractors onto the Living Wage by April 2022.

– We have a Code of Conduct which sets out the Group’s commitment to
maintaining the highest standard of ethical conduct and behaviour in
our business practice. The Code is reviewed annually. Employees receive
induction training and regular reminders on the Code of Conduct.

– We are committed to diversity and inclusion at all levels of our

business. See pages 47, 145, 183 and 200 for more details on our Equal
Opportunities Policy.

– The Group has a Health & Safety Committee which meets twice per

year. The Board receives regular reports and reviews our health & safety
processes at least annually, and the Executive Committee receive reports
monthly. See pages 200 to 201 for more details on our health and safety
policies and procedures.

– See pages 23, 32 and 50 to 56 for details on how
we are focusing on social matters, including our
real Living Wage commitment, our social impact
project review and the community and charity
projects we have supported during the year.

Social matters are not deemed to be a
principal risk for the Group; however we
are continuing to focus on social matters
through our Doing the Right Thing
strategy (see pages 51 to 56 for more
details).

– See pages 16, 22 and 45 to 49 for details of how
we looked after our employees during the year,
including how we listened to them during the
year, how we made our offices Covid-secure,
our health and wellbeing initiatives, our diversity
and inclusion initiatives and our training and
development initiatives.

Risk 7 – Resourcing

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COMPLIANCE STATEMENTS CONTINUED
NON-FINANCIAL INFORMATION STATEMENT CONTINUED

POLICIES AND DUE DILIGENCE

OUTCOMES OF POLICIES AND IMPACTS OF ACTIVITIES

RELATED PRINCIPAL RISKS (PAGES 63 TO 70)

HUMAN RIGHTS AND
MODERN SLAVERY

ANTI-BRIBERY AND
CORRUPTION

– We respect and support internationally proclaimed human rights. Our

Code of Conduct, which is reviewed annually and communicated to our
employees, reflects this commitment.

– We are committed to upholding all human rights, including the prevention
of modern slavery and human trafficking in our business and in our supply
chains. We consider the risk of modern slavery and human trafficking to
be very low in our business, but we regularly monitor and review our risk
profile and emerging regulatory guidance and will take any actions we
consider necessary to improve and strengthen our practices.

– We publish our modern slavery statement on our website annually, which
summarises our policies and the actions we have taken in our business
and our supply chains and can be found at www.workspace.co.uk/
global-content-repository/files/modern-slavery-act-statement.

– We have an Anti-Bribery & Corruption Policy, which is reviewed by

the Board annually. The Anti-Bribery & Corruption Policy sets out the
responsibilities and expectations of our employees for the prevention,
detection and reporting of bribery and other forms of corruption. The
Policy also contains our Gifts & Hospitality Policy, which provides that
the giving and receiving of gifts and hospitality must be reasonable and
proportionate in the normal course of business, both in type and value.
We require all staff to obtain line manager approval and keep a record of
any hospitality and gifts valued at over £20 (whether they are accepted
or refused).

– All staff receive training on the Anti-Bribery & Corruption Policy, including

the Gifts & Hospitality Policy, as part of their induction and regular
reminders are sent to all staff.

– We make suppliers aware of our zero-tolerance approach to bribery and
undertake due diligence on suppliers to confirm that they are themselves
committed to the prevention of bribery and corruption.
– Our Code of Conduct further reinforces these messages.

– We take a zero-tolerance approach to modern
slavery and other breaches of fundamental
human rights.

– No incidences of human rights abuse or modern

slavery have been identified (2020: Nil).

Risk 7 – Resourcing
Risk 9 – Regulatory

– It is our policy to conduct all of our business in
an honest and ethical manner. We take a zero-
tolerance approach to bribery and corruption and
are committed to implementing and enforcing
effective systems to counter bribery.

– No incidences of bribery or corruption have been

identified (2020: Nil).

Risk 9 – Regulatory

POLITICAL AND
CHARITABLE
DONATIONS

– Our policy is not to make any political donations. We only make charitable
donations that are legal and ethical, and made with the prior approval of
the Company Secretary.

– The Group did not make any political donations

Risk 9 – Regulatory

during the year (2020: Nil).

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COMPLIANCE STATEMENTS CONTINUED
NON-FINANCIAL INFORMATION STATEMENT CONTINUED

POLICIES AND DUE DILIGENCE

OUTCOMES OF POLICIES AND IMPACTS OF ACTIVITIES

RELATED PRINCIPAL RISKS (PAGES 63 TO 70)

DATA PRIVACY

– The Group continues to take its obligations under the retained EU law

– The Board continues to place high value on data

Risk 9 – Regulatory

version of the General Data Protection Regulation (UK GDPR), the Data
Protection Act 2018 and other applicable data privacy legislation very
seriously. We continue to monitor guidance and practice in this area and
to embed data privacy into the heart of the business.

– We have a Data Protection Policy, as well as ancillary policies in specific
areas (including security, data breaches, subject rights, appointment of
data processors and data privacy impact assessments). We continue
to monitor compliance with our policies and procedures and to review
and update them where appropriate to reflect developing guidance and
practice.

– Staff are regularly reminded of the importance of data privacy. Mandatory

data protection training is provided to all staff at induction and on an
annual basis, and we also provide more tailored, role-specific training to
staff where appropriate. Regular reports are provided to the Executive
Committee and the Board.

privacy, and privacy is embedded throughout the
organisation.

– Staff are aware of their duties in relation to data

privacy.

– Data privacy is a key consideration whenever new
projects are contemplated or changes to existing
arrangements are proposed.

CONFLICTS OF
INTEREST

– Through our HR processes and the Code of Conduct, employees are

required to notify the Company of any conflict of interest.

– Similarly, the Board is also reminded of this requirement, and any conflict

of interest will be recorded.

– We have procedures in place for managing conflicts of interest and keep a

WHISTLEBLOWING

– Our Whistleblowing Policy provides employees with information on
how they can report, anonymously if they wish, any concerns about
impropriety or wrongdoing within the business.

– An independent telephone line is available for anonymous reporting of

concerns.

– The Whistleblowing Policy is reviewed annually and the Board

receives updates from the Company Secretary on the operation of the
whistleblowing system.

Risk 9 – Regulatory

– Should a Director become aware that they, or
their connected parties, have an interest in an
existing or proposed transaction with the Group,
they are required to notify the Board in writing or
verbally at the next Board meeting.

– During the year, no Director had any beneficial

interest in any contract significant to the Group’s
business, other than a contract of employment
(2020: Nil).

– During the year under review, we did not receive

any whistleblowing messages (2020: Nil).

Risk 7 – Resourcing
Risk 9 – Regulatory

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TCFD

It is now widely recognised that ESG
issues present a financial risk to the
global economy. In an effort to improve
transparency, the Task Force on
Climate-related Financial Disclosures
(TCFD) framework provides guidance
to companies on how to improve
reporting on climate-related financial
risks and opportunities. Workspace
supports the TCFD recommendations
and is committed to implementing them,
providing stakeholders with information
on our exposure to climate-related risks
and opportunities, helping them make
informed decisions.

The TCFD framework addresses four
key areas: Governance, Strategy, Risk
Management and Metrics & Targets.

Following a gap analysis, this year we
will be appointing a consultant to carry
out a more in-depth scientific study
on climate scenarios and undertake a
quantitative analysis on the potential
financial impacts. We will also be
holding a workshop with key internal
stakeholders to help inform the revised
disclosure, as well as raise awareness of
TCFD throughout the business.

Governance

THE BOARD’S OVERSIGHT OF CLIMATE-RELATED RISKS AND OPPORTUNITIES

BOARD

RISK COMMITTEE

EXECUTIVE COMMITTEE

RISK MANAGEMENT GROUP

ESG COMMITTEE

Workspace Board
The highest level of responsibility for our long-
term success and the delivery of strategic and
operational objectives lies with the Board of
Directors. The Board sets the Group’s overall
risk appetite, tolerance and strategy, including
in relation to sustainability, carbon and energy
management, of which climate change is
directly linked.

Risk Committee
The Risk Committee is a Board committee
formed of independent Non-Executive
Directors and meets quarterly. It oversees
the Group’s risk management framework and
advises the Board on risk appetite, tolerance
and strategy.

Contents

Executive Committee
The Executive Committee is responsible for
the Group’s day-to-day risk management
procedures and reports to the Risk Committee
on the operation of the Group’s risk
management framework.

Risk Management Group
The Risk Management Group is chaired by the
Chief Financial Officer with other members
drawn from different areas of the business.
It meets monthly and is responsible for
implementing and embedding the Group’s
risk management activities and reviewing and
challenging risk information. It reports to the
Executive Committee with a dotted line to the
Risk Committee.

ESG Committee
The ESG Committee meets monthly, is chaired
by our Head of Sustainability and is made up
of cross functional members who are actively
involved in new developments, refurbishments
and building operations. The ESG Committee
is therefore well positioned to actively manage
climate change risks and opportunities and
engage with relevant internal and external
stakeholders to determine the impacts on
financial planning and communicate the
strategic direction and priorities. The ESG
Committee is responsible for implementing
processes to ensure the sustainable growth of
the company and enable informed business
decisions which minimise our contribution to
climate change.

The Head of Sustainability reports directly
into our Development Director who has
responsibility for sustainability at the
Executive Committee level, where overarching
progress and performance against our targets
is governed. The Head of Sustainability
provides a monthly update to the Board on
ESG matters and formally presents to the
Executive Committee and the Board multiple
times per year.

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Governance continued

MANAGEMENT’S ROLE IN ASSESSING AND MANAGING
CLIMATE-RELATED RISKS AND OPPORTUNITIES

Contents

Doing the Right Thing strategy
Our ESG strategy covers our development
practices, operational emissions and our social
impact. It ensures that we operate responsibly
in our dealings with all stakeholders and
reinforces our commitment to the sustainable
long-term growth of our business and
employment-led regeneration of London. Our
strategy is led by our Head of Sustainability
and is implemented by our ESG Committee.

Assessing climate related risks and
opportunities
It is the responsibility of the ESG Committee
to identify and assess specific climate change
issues relating to our business, environmental
initiatives, and performance against our
objectives and targets. Key members of the
committee include Head of Sustainability,
Senior Facilities Manager, Senior Project
Manager and Head of Legal.

Climate-related risks are captured in one
or more of the Group’s risk registers, which
are reviewed and overseen by the Risk
Management Group. All risks, including
climate-related risks, are assessed against a
scoring mechanism to ensure consistency.
The scoring mechanism assesses risk as a
combination of likelihood of the risk occurring

in the next 5 years and severity of impact if
the risk were to occur. The risk registers record
each risk, its score, the controls already in place
to mitigate it and any further actions which are
considered necessary or appropriate.

The Risk Management Group reports to the
Executive Committee on the Group’s risks
and effectiveness of controls. The Executive
Committee assesses the Group’s principal
risks and reports to the Risk Committee on
those risks, the operation of the Group’s risk
management framework and all material
changes to the Group’s risks and controls.
The Risk Committee is also able to ask for
information directly from the Risk Management
Group should it feel that is necessary and
appropriate. The Risk Committee reviews the
Executive Committee’s assessment of the
Group’s principal risks and has responsibility
for overseeing the Group’s risk management
framework. In turn, the Risk Committee reports
to the Board, which has ultimate responsibility
for setting the Group’s risk appetite and
managing the Group’s risks and opportunities.

More details about our risk management
framework and the role of the Risk Committee
and the Risk Management Group can be found
on pages 161 to 166.

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Strategy

Short term

Medium term

(0-5 YEARS)

(5-15 YEARS)

Long term

(15+YEARS)

As a responsible business we consider climate-
related risks and opportunities across all
our business activities including the design,
construction, refurbishment and day-to-day
operational management of our portfolio.

We identify risks and opportunities over short
term (0-5 years), medium term (5-15 years) and
long term (15+years) horizons.

In the short term we will continue to take
a proactive approach to minimising the
risks and maximising the opportunities
associated with the international and
national regulatory landscape, our
customers’ needs and expectations and a
growing concern for resource efficiency.
These priorities are shaping the way that
we build, manage and occupy buildings to
mitigate our contribution to climate change.
Key short term risks and opportunities that
we have identified are as follows:
– Increase in building regulation stringency
(MEES levels, Part L regulations, heat
network regulations)

– Shift in customer preferences
– Use of operational and construction

recycling

– Sustainable transport

Over the medium term we are focused on
identifying and further managing financial
risks associated with climate change. We
continually assess market trends and
investment opportunities to ensure we
are providing a resilient and sustainable
investment choice for the future.
– Regulatory Net Zero Carbon

requirements

– Increased utility costs
– Increased cost of raw materials
– Availability of sustainable building

materials

– Carbon pricing
– Grey water recycling
– Shift in customer preferences

To consider the longer-term climate-related
issues, such as increased precipitation, a
hotter climate and more volatile weather
events, we continue to engage with our
architects, contractors and engineers to
consider opportunities to adapt to these
climate-related issues in the design of
our developments and refurbishments to
ensure that our buildings are resilient and
fit for the future.
– Shift in customer behaviour and

preferences

– Rising mean temperatures
– Extreme variability in weather patterns
– Further increase in building regulation

stringency

– Increase market valuation through

resilience planning

See pages 91 to 94

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Strategy continued

Contents

IMPACT OF CLIMATE-RELATED RISKS AND OPPORTUNITIES
ON OUR BUSINESS, STRATEGY AND FINANCIAL PLANNING

RESILIENCE OF STRATEGY, TAKING INTO CONSIDERATION
DIFFERENT CLIMATE-RELATED SCENARIOS, INCLUDING
A 2°C OR LOWER SCENARIO

Business and Strategy
Our ‘Doing the Right Thing’ strategy ensures
that we operate responsibly in our dealings
with all stakeholders and reinforces our
commitment to the sustainable growth of our
business, including managing the impacts
of climate-related risks and opportunities.
Our ‘Doing the Right Thing’ strategy is also
supported by several core policies including
our Environmental Policy and Climate Change
Policy as well as supporting risk management
processes which set out how we will identify,
manage and respond to climate-related risks
and opportunities.

stage and within our overall business strategy
and financial planning, in particular when
planning our CAPEX and OPEX budgets, to
reduce our contribution to climate change
and reduce our operational costs to ensure
that our buildings remain attractive to tenant
and are resilient to change. Budgets include
allocations towards sustainable construction
practices, energy efficiency technologies,
on-site renewable energy, and green energy
procurement. In March 2021 Workspace
issued its first green bond and raised debt
to specifically finance or refinance green
refurbishment projects.

Financial Planning
The Board, with support from various
committees, is ultimately responsible for
ensuring that the impact of climate related
risks and opportunities is considered within
our financial planning. Financial impact
assessments are undertaken and monitored
at various levels with the business in order
to consider the risks and opportunities from
climate change and wider sustainability issues
(such as energy, water, waste). These financial
impacts are considered as of asset acquisition

As an example, the risk associated with the
Minimum Energy Efficiency Standard (MEES),
whereby landlords are unable to let or renew a
letting if a property falls below an E rated EPC,
was identified as a ‘high’ risk as it is considered
to have a substantive financial impact on
Workspace as it directly affects our ability
to let out units, and thus has a significant
impact on our profits. To manage this risk, a
subcommittee including representatives from
the development and sustainability teams was
set up to closely monitor progress.

Our properties are at risk from physical
climate-related issues including changes in
temperature extremes leading to increase
cooling and heating loads, changes in
precipitation leading to flash flooding, and
physical damage to buildings from extreme
weather events, which in turn can lead to
greater stresses on our properties. We assess
the risks that climate change presents to our
portfolio and customers at least annually. This
information is used to ensure that our ‘Doing
the Right Thing’ strategy and buildings are
resilient and fit for a changing future. Our
‘Doing the Right Thing’ strategy’s objectives
and targets help to deliver resilient buildings
to support our business, customers and the
communities that our business operates within.

Our strategy and supporting policies have
all been influenced by legislation such as
Greenhouse Gas (GHG) and Carbon Reporting
Scheme (SECR) reporting, Energy Saving
Opportunity Scheme (ESOS), and the
Minimum Energy Efficiency Standard (MEES).

We focus heavily on energy and carbon
reduction measures, to ensure that our assets
operate as efficiently as possible. As detailed in
the Metrics and Targets section below we have
developed science-based targets which are set
against recognised 1.5°C transition scenarios.
Setting targets in this way will enable us to
determine a carbon reduction trajectory
between our base year of 2019/20 and target
year of 2029/30.

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Risk management

IDENTIFYING AND ASSESSING
CLIMATE-RELATED RISKS

RISK MANAGEMENT FRAMEWORK

Risk management continues to be an integral
part of all our activities. Risks and opportunities
are considered in every business decision we
make. It is embedded in our culture to consider
potential risks of any new business decision.
We focus on key risks which could impact on
the achievement of our strategic goals and
therefore on the performance of our business.

We have an established risk management
framework in place to help us capture,
document and manage risks facing our
business. The Risk Committee oversees the
effectiveness of risk management throughout
the organisation. See our risk management
framework on page 166.

Our aim is to manage each of our risks and
mitigate them so that they fall within the risk
appetite level we are prepared to tolerate
for each risk area. Risk appetite reflects the
overall level of risk acceptable with regards
to our principal business risks. The Board is
responsible for deciding the amount of risk it
is willing to take. High risk, after considering
the controls we have in place to mitigate risks,
is not generally tolerated. We work towards a
medium to low risk profile, ensuring that we
have mitigating actions in place to bring each
risk down to within the agreed risk appetite.

Our risk management framework is
underpinned by close working relationships
between the Executive Directors, senior
management and other employees, which
enhances our ability to efficiently capture,
communicate and action any risk issues
identified.

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Contents

IDENTIFYING AND ASSESSING RISKS

Overall, we identify and assess risks across two key areas: Principal Business (Strategic) Risks and Operational Risks.

The three-scaled (low, medium, high) risk severity score is determined using the following calculation: Impact x Impact x Likelihood, which provides a weighted impact scoring.
The impact is determined on a scale from 1 (low) to 4 (severe) based on revenue, property valuation variation, hazard and health & safety and reputational consequences. Likelihood is
determined on a scale from 1 (unlikely) to 4 (almost certain), considering the likelihood of the risk materialising within a five-year period against the following criteria:
– <20%: unlikely,
– 21-49%: possible,
– 50-79%: likely,
– >80%: almost certain.

The below table list our most material climate-related risks and their potential financial impact on our business, along with our current mitigation strategy.

TRANSITION RISKS

RISK

POTENTIAL FINANCIAL IMPACT

MITIGATION STRATEGY

POLICY AND LEGAL

Increased pricing of GHG
emissions

Increased operating costs

– Continue to purchase green electricity.
– Continue rolling out the energy reduction programme.

Enhanced emissions-reporting
obligations

Increased operating costs

Mandates on and regulation of
existing products and services

Write-offs, asset impairment, and early
retirement of existing assets due to
policy changes

– Annual review of legislative landscape.
– Integration of legislative compliance costs into business plans.
– Implementation of reporting structures and procedures to manage compliance risk.
– Monthly review of energy and emissions data by the energy manager and verification by

external specialist to ensure accuracy.

– Anticipating future stringent energy efficiency building regulations through continuous

energy efficiency programme.

– Upgrading of energy intensive units and continuous monitoring of the portfolio’s exposure

to the Minimum Energy Efficiency Scheme (MEES).

TECHNOLOGY

Substitution of existing
products and services with
lower emissions options

Costs to adopt/deploy new practices
and processes

– Roll out of energy efficiency technologies (including smart Building Management Systems

(BMS) and air source heat pumps).

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Contents

RISK

POTENTIAL FINANCIAL IMPACT

MITIGATION STRATEGY

TRANSITION RISKS CONTINUED

MARKET

Shift in customer behaviour

Increased capital expenditures and
operating costs
Reduced revenue from decreased
demand for goods/services

– Hosting environmental groups providing a platform for customer to exchange ideas on how
to build a more sustainable workplace but also to create a feedback loop and ensure that
Workspace are responding to customers’ expectations and needs.

– Including ESG questions in customer surveys.

Increased cost of raw materials

Increased cost for redevelopment and
refurbishment activities

– Investigating low cost, low environmental impact alternatives to traditional building

materials.

– Keep as much of the old building structure as possible in refurbishment projects.

Increased utility prices

Increased operating costs

– Electricity contract on a REGO certified green tariff.
– Continue investigating self-generation opportunities (on-site renewable generation for all

new development projects).

Market uncertainty

Re-pricing of assets

– Maintain an attractive portfolio through our Net Zero Carbon strategy.

REPUTATION

Increased stakeholder concern
or negative stakeholder
feedback

Reduction in capital availability

– Provide transparency through our annual participation to industry sustainability benchmarks

such as CDP and GRESB.

PHYSICAL RISKS

CHRONIC

Changes in precipitation
patterns and extreme
variability in weather patterns

Increased capital costs (e.g., damage to
facilities)

– On-going improvement of our buildings external structure as part of our rolling

refurbishment programme.

– Factoring potential flooding impacts into new developments at the planning stage.

Rising mean temperatures

Increased operating cooling costs

– Continue installing air source heat pumps for all new developments and refurbishments.

Insulation and efficient cooling measures are taken into account for all new developments.

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Contents

The below table list our main climate-related opportunities and their potential financial impact on our business, along with our progress to date.

OPPORTUNITY

POTENTIAL FINANCIAL IMPACT

PROGRESS

RESOURCE EFFICIENCY Use of recycling

Reduce construction costs

Move to more efficient
buildings

Increase in property valuation, lower
operating costs

– We are aiming for high demolition waste recycling rates in our redevelopment projects.
– We are closely engaging with our waste contractors to improve our recycling areas on site

and introduce more streams where necessary.

– Our rolling sustainable green refurbishment programme, as well as the installation of air

source heat pump and energy efficiency technologies ensure that our portfolio becomes
more resilient to transitional and physical climate-related risks.

– Energy audits were carried out across our portfolio as part of the Energy Savings

Opportunity Scheme. We then implemented the identified energy efficiency initiatives.
This included lighting upgrades, BMS and control optimisation, HVAC upgrades, baseload
management and building fabric upgrades.

Reduced water usage and
consumption

Increase in property valuation, lower
operating costs

– Through the installation of water efficiency fixtures and leak detection system, we ensure

that our water usage decreases year on year.

Availability of sustainable
building materials

Better competitive position to reflect
shifting consumer preferences, resulting
in increased revenues

– We continue to investigate and trial new sustainable materials where possible in new

development projects.

ENERGY SOURCE

Use of lower-emission sources
of energy

Use of new technologies

PRODUCTS AND
SERVICES

Development and/or expansion
of low emission goods and
services

Reduced exposure to future fossil
fuel price increases, less sensitivity to
changes in carbon prices
Increased reputational benefits and
capital availability

Returns on investment in low-emission
technology
Increased reputational benefits and
capital availability

Increased revenue through demand for
lower emissions products and services

– We have worked with external consultants to review our portfolio and determine which sites
are suitable for onsite renewable generation. All new developments have solar PV panels
installed. We also install air source heat pumps to remove our dependence on gas powered
heating.

– We will continue to improve insulation measures and cooling alternatives. For example we

install air source heat pumps to remove the need for gas powered heating.

– We ensure that our energy management programme puts us in a competitively

advantageous position in regard to the increasing demand for sustainable buildings in the
London property market. We now have 61 % of our portfolio with Energy Performance
Certificates rated between A and C which is a high percentage compared to our peers.
– We encourage the use of more efficient modes of transport through the installation of

Electric Vehicle (EV) charging stations at sites operated by Workspace. This anticipates
future customer demands.

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Contents

OPPORTUNITY

POTENTIAL FINANCIAL IMPACT

PROGRESS

MARKETS

Use of public-sector incentives Access to green finance

– We issued our first green bond thus raising debt to specifically finance or refinance green

refurbishment projects.

Behaviour change

Reduced operating costs (e.g., through
efficiency gains and cost reductions)

– We work with customers to implement behavioural change and emissions reduction which
will result in reduced costs for all parties involved and facilitates the exchange of different
ideas and strategies.

Shift in consumer preference

Better competitive position to reflect
shifting consumer preferences, resulting
in increased revenues

RESILIENCE

Participation in renewable
energy programs and adoption
of energy efficiency measures

Increased market valuation through
resilience planning

Supply chain engagement

Increased reliability of supply chain and
increased market valuation through
resilience planning

– We engage with our customers, listening to their feedback and ideas through our

“environmental groups”.

– We voluntarily share information on our carbon emissions and energy usage to both our

customers and investors through our website.

– We work with groups such as the Better Buildings Partnership to help raise awareness

and work with other leading commercial property owners to improve the sustainability of
existing commercial building stock.

– We work with external consultants to review our portfolio and determine which sites are

suitable for onsite renewable generation.

– Our new developments integrate on-site solar panels.
– Energy audits were carried out across our portfolio as part of the Energy Savings

– We carry out Lifecycle Carbon Assessments at design stage of redevelopment projects.
– We engage with our supply chain to ensure that construction practices limit the use of

new material where possible and make use of materials with highly recycled or recyclable
content.

– We aim for BREEAM “Excellent” certifications for all our new developments and major

refurbishment projects.

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Contents

PRINCIPAL BUSINESS (STRATEGIC) RISKS

OPERATIONAL RISKS

These are risks which impact achievement of
our strategy and objectives. They are identified,
assessed and managed by the Executive
Committee but are ultimately owned by the
Board. The Board Risk Committee receives
updates on these principal risks at least twice
a year, and considers whether we continue to
operate within our desired risk appetite.

These are lower level risks covering day-to-
day processes and procedures and regulation
requirements. These cover all areas of the
business, such as Finance, Operations,
Investment and Development and are
assessed, managed and owned by the Risk
Management Group, which reports to the
Executive Committee. Day-to-day operational
risks are managed via risk registers each of
which is reviewed and challenged by the Risk
Management Group at least twice per year.
Changes in operational risks are reported to
the Board Risk Committee as appropriate.

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COMPLIANCE STATEMENTS CONTINUED
TCFD CONTINUED

Contents

Metrics and Targets

Metrics used to assess climate-related risks
and opportunities in line with its strategy and
risk management processes
To understand our impacts and performance
we report on a wide range of consumption and
intensity metrics relating to energy, carbon,
waste and water.

Scope 1, Scope 2 and Scope 3 Greenhouse
Gas Emissions (GHG) and the related risks
Carbon emissions represent one of our largest
environmental impacts and we are actively
working to reduce our sources of carbon
where possible. Significant contributors to our
operational carbon emissions are the electricity
and gas consumed within our buildings;
by improving the energy efficiency of our
buildings we aim to reduce our overall carbon
footprint. Following an in-depth analysis of our
Scope 3 emissions, we now have a much better
understanding of the emissions associated with
our development and refurbishment activities
which make up the majority of our Scope 3
emissions. Refer to page 97 for our Scope 1, 2
and 3 greenhouse gas emissions data and year
on year changes.

Targets used to manage climate-related risks
and opportunities and performance against
targets
To reduce our carbon emissions, we continue
to focus on designing low-carbon buildings
and implementing energy efficiency
initiatives throughout the portfolio, whilst
actively engaging with both our site staff and
customers.

OUR MAIN TARGETS TO REDUCE
EMISSIONS ARE:

Reduce absolute Scope 1 GHG
emissions 42% by FY2030 from
a FY2020 base year

1
2 Continue annually sourcing 100%
3 Reduce Scope 3 GHG from capital

goods 20% per square foot of net
lettable area by FY2030 from a
FY2020 base year

renewable electricity through FY2030
(Scope 2)

estate portfolio by 2030 (includes
operational & embodied carbon)

4 Deliver a net zero carbon real
5 Undertake embodied carbon
6 Develop a comprehensive climate

change resilience strategy for our
portfolio by March 2022

assessments for all new developments
and major refurbishment projects

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COMPLIANCE STATEMENTS CONTINUED

Contents

GHG/SECR
emissions

GREENHOUSE GAS (‘GHG’) EMISSIONS AND ENERGY USE DATA FOR STREAMLINED ENERGY & CARBON REPORTING (SECR)

In order to satisfy the requirements, we report both absolute emissions and emissions as an intensity ratio, this is based on net lettable and occupied area.

The table opposite details our Scope 1, 2 and
3 greenhouse gas emissions data and year on
year changes.

Source of emissions

Scope 1 (Direct)
Gas (tCO2e)
Fugitive Emissions (tCO2e)
Vehicle Emissions (tCO2e)
Scope 2 (Energy Indirect)
Electricity (location based) tCO2e
Electricity (market based) tCO2e
Purchased Heat (location based) tCO2e
Total Scope 1 &2 (Location Based)
Energy Consumption used to calculate above emissions (kWh)
Intensity Ratio: Net lettable area tCO2e/m2
Intensity Ratio: Occupied Space area tCO2e/m2
Scope 3 (Other Indirect)
Purchased Electricity Transmission & Distribution (tCO2e)
Customer Direct Energy (tCO2e)
Water Supply (tCO2e)
Water Treatment (tCO2e)
Waste Management (tCO2e)
Heat – Transmission & Distribution (tCO2e)
Embodied carbon in development projects
Purchased goods and services
Employee Commuting
Business Travel
Total Scope 1, 2 & 3

2019/20

Base Year

3,450
2,620
828
3
7,151
7,021
0
130
10,601
42,466,715
0.029
0.033
65,838
596
3,265
91
187
82
7
53,774
7,678
84
74
76,439

2020/21

2,887
2,028
857
2
4,719
4,568
0
151
7,606
31,507,660
0.020
0.026
36,640
393
2,053
61
126
41
8
32,308
1,529
121
0
44,246

2020/21 vs
2019/20
Baseline
% change

-16%
-23%
4%
-33%
-34%
-35%
–
16%
-28%
-26%
-31%
-21%
-44%
-34%
-37%
-33%
-33%
-50%
14%
-40%
-80%
44%
-100%
-42%

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COMPLIANCE STATEMENTS CONTINUED
GHG/SECR EMISSIONS CONTINUED

METHODOLOGIES

REPORTING PERIOD

1ST APRIL 2020 – 31ST MARCH 2021

BOUNDARY

Operational control, UK only.
Scope 1 and 2 emissions include tenant consumption where we procure
gas, electricity or heat on their behalf.

REPORTING
STANDARDS

World Resources Institute/World Business Council for Sustainable
Development Greenhouse Gas Protocol: A Corporate Accounting and
Reporting Standard, Revised Edition (the GHG Protocol) (Scope 1 and 2).
World Resources Institute/World Business Council for Sustainable
Development Greenhouse Gas Protocol: Corporate Value Chain (Scope 3).

REGULATORY

Part 7 of The Companies Act 2006 (Strategic Report and Directors’
Report) Regulations 2013

VERIFICATION

Verified to the international standard ISO 14064-3:2019 Specification.
Limited level of assurance, based upon a 5% materiality threshold.

OTHER

When reporting totals, the location-based emissions are used.
All market-based emissions are backed by Renewable Energy
Guarantees of Origin (REGOs)
Emissions from vacant units have been omitted from data collection
as they are considered to be immaterial.

Contents

Energy Efficiency Action Taken during
2020/21:
We have proactively identified and delivered
a range of energy management projects
across our portfolio including technology
and infrastructure upgrades, improved data
management and employee engagement.
During the year we have implemented LED and
PIR lighting upgrades, set up smart building
management systems, solar panels and carried
out insulation improvements, all of which are
expected to result in a 1,257 MWh saving in
energy consumption. Many of these projects
were recommendations from our phase two
ESOS (Energy Saving Opportunity Scheme)
audits carried out in 2019 which identified
2,909 MWh of potential energy savings.

We have continued to roll out our Optergy
Building Energy Management System (BEMS)
which is a smart metering technology that has
enabled real-time energy monitoring at the
building level right down to individual plant
equipment. The data provided by the BEMS
is used by our in-house Facility Management
teams to improve energy management
practices and reduce GHG emissions. The
Optergy customer portal is now live at fourteen
of our sites and enables our customers to log in
to view and monitor their energy consumption
profiles for their own unit.

Performance
Our operational emissions have decreased
significantly this year due to low utilisation
across our centres as a result of the pandemic.
However, our centres remained open during
the year, supporting key workers and
customers who couldn’t work from home,
which is why there was a reasonable amount of
consumption, particularly the heating over the
winter months as this is often centralised.

Another contributing factor for Scope 1
emissions reductions is the replacement of
several gas central heating systems with air
source heat pumps for environmental purposes
and because there has been a further increase
in demand for air-conditioned space. Our gas
consumption has decreased as a result of this
and improved data monitoring.

Besides the low occupancy, the reduction
in Scope 2 emissions is due to a decrease in
the carbon dioxide emission factor for UK
electricity generation, which is attributed to
a decrease in coal generation and the rapid
expansion of renewables. Our market-based
electricity figure is zero because all of the
electricity we purchase is now on a renewable
energy contract backed by Renewable Energy
Guarantees of Origin (REGOs).

Both intensity ratios have reduced since
the baseline year, with a slight year on year
increase for the net lettable area intensity.

Our Scope 3 emissions have decrease mostly
due to the reduced number of construction
activities across the portfolio. The emissions
associated with waste management decreased
by 50% compared to the previous year due to
a decrease in occupancy but also an increase in
the recycling rate. Our recycling target remains
76% for the coming year.

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INTRODUCTION TO CORPORATE GOVERNANCE

Contents

Stephen Hubbard
Chairman

I have been proud of the loyalty and
commitment of our people this year and
how all our teams at Workspace have
demonstrated strong adherence to our
values during these difficult market
conditions. Maintaining good governance
and operating under a clear purpose are
more important than ever in challenging
times and I believe Workspace will come
out of this crisis stronger than ever.

Introduction to corporate governance

Chairman’s governance letter

Board leadership and company purpose

Division of responsibilities

Composition, succession and evaluation

Audit, risk and internal control

Remuneration

Report of the Directors

page 99

page 102

page 104

page 124

page 136

page 149

page 167

page 198

Statement of Directors’ responsibilities

page 202

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INTRODUCTION TO CORPORATE GOVERNANCE CONTINUED

Governance
at a glance

Key Board decisions

Key governance activities

The major decisions taken by
the Board and its Committees
during the year included:

The Board’s key governance
activities during the year
have included:

SUPPORTING CUSTOMERS

Approved the offering of a 50% rent
reduction to the Group’s customers who had
been affected by Government restrictions
related to Covid-19 (see pages 50 and 123).

NET ZERO CARBON PATHWAY

Confirmed the Board’s target to become
net zero carbon by 2030 and approved the
strategy (see pages 40 to 41 and 123).

APPROVED GREEN BOND

Approved the issuance of a £300m
green bond for a term of seven years
(see pages 42, 115 and 123).

Key activities in 2020/21

See page 111

1
Appointment of two new
Non-Executive Directors

5
A review of the executive
remuneration framework
and new Remuneration
Policy presented
to shareholders at the
AGM in July 2020

See page 140

2
External evaluation of the
Board, its Committees and
individual Directors

See page 178

See page 146

4
Appointing Stephen
Hubbard as the Non-
Executive Director
responsible for employee
engagement

3
The creation of
a Risk Committee

See page 118

See page 161

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INTRODUCTION TO CORPORATE GOVERNANCE CONTINUED

Compliance
statement

The Board confirms that, for the year
ended 31 March 2021, we have complied
with all of the provisions of the UK
Corporate Governance Code 2018. The
application of the Code’s Principles
is evidenced throughout the Annual
Report and the table to the right shows
how the Governance section has been
structured around the Code Principles
(A to R).

Further information on the Code can
be found on the Financial Reporting
Council’s website at www.frc.org.uk.

How we comply
with the
UK Corporate
Governance Code
2018

Board leadership
and company
purpose
Attendance at Board and
Committee meetings

page 105

Division of
responsibilities

Complying with the Code
Principles

page 105

Board role and
responsibilities

page 125

page 126

Our Board

page 106

Our governance framework page 128

Board and Committee
membership

page 109

How we govern

page 129

Composition,
succession and
evaluation
Complying with the Code
Principles

page 137

Chairman’s statement

page 138

Role of the Nominations
Committee

page 139

Audit, risk and
internal control

Remuneration

AUDIT COMMITTEE REPORT

Role of the Audit
Committee

External audit

Significant matters
considered

page 154

page 157

page 159

Complying with the Code
Principles

Chairman’s statement

The work of the
Remuneration Committee

Remuneration Report
at a glance

page 168

page 169

page 172

page 173

RISK COMMITTEE REPORT

Our Remuneration Policy

page 178

Role of the Risk Committee page 163

Our risk management
framework

page 166

Annual report on
remuneration

page 182

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Contents

INTRODUCTION TO CORPORATE GOVERNANCE CONTINUED

2 June 2021

Chairman’s
governance
letter

Having assumed the role of Chairman in July 2020, I present our
Governance report for the year. The Board remains committed to
maintaining effective corporate governance and integrity, enabling us to
deliver our strategy for the long-term benefit of all our stakeholders.

Board changes and succession planning
Through the Nominations Committee, we focus on Board succession
planning and composition, to ensure that we have the appropriate
balance of skills, independence, experience and diversity. Maria Moloney
will have served nine years on the Board in May 2021, and so will retire at
our 2021 AGM. On behalf of the Board, I would like to thank Maria for her
valued contribution to the business over the years and, in particular, for
her Chairmanship of the Remuneration Committee. Suzi Williams, who
joined the Board in January 2020, has succeeded Maria as Chair of the
Remuneration Committee.

We welcomed Rosie Shapland and Lesley-Ann Nash during the year, as
two new Non-Executive Directors. Rosie, a Chartered Accountant, was
previously an audit partner at PwC. Rosie will assume the role of Chair of
the Audit Committee from the conclusion of the AGM in 2021. Both Rosie
and Lesley-Ann bring a wealth of experience, complementing the existing
skills already evident on the Board. These appointments were subject to
a formal, rigorous and transparent procedure, led by the Nominations
Committee. More information on Rosie and Lesley-Ann’s inductions and the
search process can be found on pages 140 to 142.

Ishbel Macpherson stepped down from the Board in July 2020 and I would
like to take this opportunity to thank Ishbel for her contribution to the
Board during her tenure.

Board evaluation and effectiveness
There is always the ability to improve, and we take the regular Board
evaluation process as an important opportunity to reflect upon our own
performance. This year, our Board evaluation was undertaken externally
by Fidelio Partners and I am pleased to report that the Board and its
Committees were considered to be working effectively. It was pleasing to
note that Board members feel proud of the Company and excited by the
opportunities Workspace faces. The Board also recognised and respected
the contribution and achievement of the Executive Committee through the
Covid-19 crisis, referencing in particular the response to the first lockdown
of offering a 50% rent reduction to all business centre customers in the
first quarter.

Details of the evaluation process, the findings of the review and our
progress against the 2019/20 objectives can be found on pages 146 to 148.

Governance during Covid-19
2020 has been a turbulent year with Covid-19 and uncertainty surrounding
Brexit. To ensure that the Board was able to actively support the business
as the Covid-19 pandemic developed, additional Board and Committee
meetings were held to provide leadership and effective risk oversight. The
Board also moved rapidly to a new form of remote working, supporting
the Executive and providing key approvals and decisions when required.
Regular updates were provided to the Board by the CEO. In addition, town
hall meetings, hosted by the CEO and members of the Executive Team,
answering anonymous questions raised by staff (see page 118) provided
valuable insights for the Board.

To ensure the safety of employees and our shareholders, we held the
2020 AGM as a closed meeting. At the time of writing, we are expecting all
restrictions on meetings and movement to be lifted in June 2021, and on
that basis preparations are being made to hold an open AGM on 22 July
2021, subject of course to any Government guidance in place at the time.

The Board continues to be supported by the work of our Committees
whose full reports follow across pages 136 to 197. As noted, key
recommendations from the Nominations Committee have centred on
Board succession planning. A new Risk Committee was also established
during the year and is a compelling addition to our governance structure.
The Audit Committee has maintained its focus on monitoring the integrity
of financial reporting and its oversight on the effectiveness of the external
audit. The Remuneration Committee has continued to oversee the
alignment between pay and performance, with consideration of balanced
and fair outcomes in the context of the external environment.

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INTRODUCTION TO CORPORATE GOVERNANCE CONTINUED

Employee engagement
Employee engagement remains an important part of my role which I
will continue to develop during my tenure. I have really enjoyed meeting
with employees as part of this programme (both in person and virtually)
and discussing a broad range of topics. Regular engagement with our
employees is an important channel for gathering customer insights,
broader market information, as well as helping to maintain a positive
company culture and a proactive working environment. Awareness and
understanding of employees’ views informs our discussions at the Board
and Executive Committee level.

Details on employee engagement can be found on page 118.

Looking forward
The team at Workspace have worked incredibly hard in navigating the
challenges faced by the business over the past year brought about by
the coronavirus pandemic. They have shown real dedication and resolute
attention to their work. I would like to thank them all for their commitment
to the business and for continuing to nurture the vital relationships we hold
with our customers. I am also confident that Workspace has a culture, both
within and outside of the boardroom, that will result in the right decisions
and actions being taken to promote the long-term success of the business.

Stephen Hubbard
Non-Executive Chairman

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BOARD LEADERSHIP AND COMPANY PURPOSE

Contents

Graham Clemett
Chief Executive Officer

The determination,
engagement and loyalty of
our employees, the strength
of our relationships with our
stakeholders and strong
governance are fundamental
to our long-term success.

Attendance at Board and Committee meetings page 105

Complying with the Code Principles

Our Board

Board and Committee membership

page 105

page 106

page 109

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BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED

Overview

Attendance at Board and
Committee meetings

Board Audit Remuneration Risk Nominations

Stephen Hubbard1

Graham Clemett

Dave Benson

Chris Girling4

Maria Moloney3

Lesley-Ann Nash2

Damon Russell4

Rosie Shapland2

Suzi Williams3

Ishbel Macpherson5

Daniel Kitchen5

9/9

1/1

–

9/9 3/3

8/9 3/3

3/3

1/1

9/9 3/3

3/3

1/1

9/9 3/3

4/4

1/1

–

8/8

–

4/4 2/2

7/8

1/1

–

1/1

4/4 2/2

1/1

8/8

4/4

–

3/3

–

3/3

–

3/3

–

3/3

1/1

1. Stephen Hubbard was appointed as Chairman in July 2020. In accordance with

the Code, Stephen stepped down as a member of the Audit Committee.

2. Rosie Shapland and Lesley-Ann Nash were appointed to the Board on

6 November 2020 and 1 January 2021 respectively. Rosie and Lesley-Ann
attended their first Board and Committee meetings in January 2021.

3. Suzi Williams was appointed as Chair of the Remuneration Committee on

1 January 2021. Maria Moloney attended her last meeting of the Committee in
November 2020, although she remained a member until the handover to Suzi was
completed in January 2021. Maria did not attend the Board or the Remuneration
Committee meetings in April 2020 due to personal circumstances.

4. Chris Girling and Damon Russell stepped down from the Remuneration

Committee during the year. They attended their last meeting in July 2020.

5. Daniel Kitchen and Ishbel Macpherson stepped down from the Board on 9 July

and 24 July 2020 respectively.

Complying with the
Code Principles

PRINCIPLE A
A successful company is led by an
effective and entrepreneurial board,
whose role is to promote the long-term
sustainable success of the company,
generating value for shareholders and
contributing to wider society.

PRINCIPLE B
The board should establish the
company’s purpose, values and
strategy, and satisfy itself that these
and its culture are aligned. All directors
must act with integrity, lead by example
and promote the desired culture.

There have been a number of changes to
the Board this year. We were pleased to
welcome Rosie Shapland and Lesley-
Ann Nash as Non-Executive Directors
in November 2020 and January 2021
respectively.

Read more about their appointments
and our effective and experienced Board
on pages 140 to 148.

The Board sets the tone from the top
by considering culture and values
throughout its decision-making.

Read more about how the Board
monitored and assessed the Group’s
purpose, values and culture on page 113.

PRINCIPLE C
The board should ensure that the
necessary resources are in place for
the company to meet its objectives
and measure performance against
them. The board should also establish
a framework of prudent and effective
controls, which enable risk to be
assessed and managed.

PRINCIPLE D
In order for the company to meet
its responsibilities to shareholders
and stakeholders, the board should
ensure effective engagement with, and
encourage participation from, these
parties.

PRINCIPLE E
The board should ensure that workforce
policies and practices are consistent
with the company’s values and support
its long-term sustainable success. The
workforce should be able to raise any
matters of concern.

The Board regularly discusses our
strategy and objectives and our progress
against them. Read more on page 111.

The Risk Committee regularly reviews
our risk framework and internal control
processes with input from the Audit
Committee on financial risks. Read more
on pages 155, 161 and 166.

We have continued with our programme
of stakeholder engagement this year,
including with our people, customers
and suppliers. Read more on pages 118
to 121.

We value the contribution that our
people make to the success of our
business and we provide benefits
and support mechanisms to maintain
physical and mental wellbeing.

We continue to have a thorough
programme of investor engagement.
Read more on pages 116 to 117.

Read more on our workforce policies
and practices on page 114.

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Contents

BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
BOARD OF DIRECTORS CONTINUED

Our Board

CHAIRMAN

EXECUTIVE DIRECTORS

Led by our Chairman, Stephen Hubbard,
the Board provides the leadership of the
Company and is collectively responsible
and accountable to shareholders for
the Company’s long-term success,
leadership, strategy, values, culture,
control and management.

COMMITTEE MEMBERSHIP

Nominations Committee
Audit Committee
Remuneration Committee
Risk Committee
Executive Committee
Investment Committee
Disclosure Committee
Chair

RELEVANT SKILLS AND BUSINESS
EXPERIENCE
– Many years’ experience
of operating within the
property sector.

– An outstanding track

record in the investment
market and has advised
on several landmark
transactions involving
international capital.

– Broad range of knowledge
and experience at board
level.

– Extensive experience in

leadership and executive
management.

– Experience of public

company boards and their
operation.

– Experience of regeneration
and development projects.

– Strong financial skills.

RELEVANT SKILLS AND BUSINESS
EXPERIENCE
Detailed knowledge of
Workspace operations
and extensive experience
of the property sector
gained through his 13 years’
experience with the Group.
– Strong commercial,

strategic and
communication skills.
– Previously CFO of the

Group, having joined in
2007.

– Graham is a chartered

accountant.

– Strong financial skills.
– Extensive experience
in leadership and
management and
establishing an open and
transparent culture.
– Significant experience

of financing and capital
raising.

– Extensive investor relations

experience.

Graham Clemett
Chief Executive Officer

COMMITTEE MEMBERSHIP

APPOINTED
Board: July 2007
CEO: 24 September 2019

CURRENT EXTERNAL
APPOINTMENTS
Graham is currently the Senior
Independent Non-Executive
Director and Chairman
of the Audit Committee at
The Restaurant Group plc.

PREVIOUS APPOINTMENTS
Previously, Graham was
Finance Director for UK
Corporate Banking at RBS
Group PLC. Prior to that,
Graham spent eight years at
Reuters Group PLC, latterly as
Group Financial Controller.

Stephen Hubbard
Independent
Non-Executive Director

COMMITTEE MEMBERSHIP

APPOINTED
Board: July 2014
Chairman: 9 July 2020

CURRENT EXTERNAL
APPOINTMENTS
Stephen is Non-Executive
Chairman of LXI REIT PLC
and a member of the advisory
board of Redevco, a pan-
European property holding
company.

PREVIOUS APPOINTMENTS
Stephen was Chairman of
CBRE UK until he retired in
December 2019. He joined
Richard Ellis in 1976 and held
the position of Head of EMEA
and UK Capital Markets from
1998 to 2012.

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BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
BOARD OF DIRECTORS CONTINUED

EXECUTIVE DIRECTORS CONTINUED

NON-EXECUTIVE DIRECTORS

RELEVANT SKILLS AND BUSINESS
EXPERIENCE
– Strong financial skills,

having gained experience
in a series of dynamic
businesses. Dave is a
Chartered Accountant.
– A good understanding
of technology and its
commercial applications.
– High level of commercial
expertise, business and
strategy development
gained with Whitbread
plc and in other public
companies.

– Strong communication and

leadership skills.

– Experience of infrastructure
and development projects.

– Extensive experience of
corporate transactions,
acquisitions and
integrations.

– Experience of investor

relations, capital markets
and investor roadshows.
– Detailed knowledge of risk
management and internal
control systems.

1. Dave joined the Board as Chief

Financial Officer on 1 April 2020.
From 1 April 2020, Dave became
a member of the Executive
Committee, the Investment
Committee and the Disclosure
Committee.

Dave Benson
Chief Financial Officer

COMMITTEE MEMBERSHIP

APPOINTED
1 April 20201

CURRENT EXTERNAL
APPOINTMENTS
Dave does not have
any current external
appointments.

PREVIOUS APPOINTMENTS
Prior to joining Workspace,
Dave was the Corporate
Finance Director of Whitbread
PLC. He previously held senior
finance roles at Kier Group
plc and Keller Group PLC.
He qualified as a Chartered
Accountant with Deloitte.

PREVIOUS APPOINTMENTS
Chris was Group Finance
Director of Carillion PLC from
1999 to 2007 and Vosper
Thornycroft PLC from 1991 to
1999. Chris retired as a Non-
Executive Director of Keller
Group PLC in May 2019.

RELEVANT SKILLS AND BUSINESS
EXPERIENCE
– CFO of FTSE 250

companies for 17 years.

– Recent and relevant

financial experience as a
Chartered Accountant.
– Detailed knowledge of
risk assessment and
management systems.

– Experience of infrastructure
and development projects.

PREVIOUS APPOINTMENTS
Maria was previously on
the Board of the Belfast
Harbour Commissioners, the
Industrial Development Board
for Northern Ireland, the
Northern Ireland Transport
Holdings Company, the
Independent Television
Commission (London) and
The Broadcasting Authority
of Ireland (Dublin).

RELEVANT SKILLS AND BUSINESS
EXPERIENCE
– Strong marketing and

commercial skills.

– A lawyer by background,
with significant legal and
corporate governance
experience.

– Business and strategy

development.

– Strategic business

assessments across diverse
market sectors.

Maria Moloney
Independent Non-Executive
Director

COMMITTEE MEMBERSHIP

APPOINTED
May 20121

CURRENT EXTERNAL
APPOINTMENTS
Maria is currently on the
Board and a Trustee of the
Northern Ireland Cancer
Centre in Belfast.

Chris Girling
Senior Independent
Non-Executive Director

COMMITTEE MEMBERSHIP

APPOINTED
February 20131

CURRENT EXTERNAL
APPOINTMENTS
Chris, a Chartered
Accountant, is currently
a Non-Executive Director
and Chairman of the Audit
Committee of Johnson
Service Group PLC and
Non-Executive Director
and Chairman of the Audit
Committee of South East
Water Limited. He is also Chair
of Trustees for the Slaughter
and May Pension Fund.

1. Chris was appointed Chairman of the

Audit Committee in July 2014.

1. Maria was Chair of the Remuneration

Committee until 1 January 2021.

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BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
BOARD OF DIRECTORS CONTINUED

NON-EXECUTIVE DIRECTORS CONTINUED

Suzi Williams
Independent Non-Executive
Director

COMMITTEE MEMBERSHIP

APPOINTED
January 20201

CURRENT EXTERNAL
APPOINTMENTS
Suzi is a Non-Executive
Director at Zegona
Communications where she
Chairs their Nomination and
Remuneration Committee.
She is also a Non-Executive
Director at Telecom Plus.

PREVIOUS APPOINTMENTS
Suzi was a Non-Executive
Director and Chair of
Remuneration at The AA
plc until the successful sale
to private equity earlier in
2021. Prior to that, she held a
variety of strategic marketing
and commercial roles in blue
chip consumer businesses
from Procter and Gamble
Europe and BBC Worldwide
to KPMG. Most recently
she was Chief Brand and
Marketing Officer at BT plc for
ten years until 2016.

RELEVANT SKILLS AND BUSINESS
EXPERIENCE
– Deep experience

leading strategic brand
development, commercial
marketing, growth and
innovation at publicly listed
companies.

– Adviser and coach to a

number of start up businesses
in the technology space.

– Seasoned Plc Non-Executive
Director and Remuneration
Committee Chair.

1. Suzi was appointed Chair of the
Remuneration Committee with
effect from 1 January 2021.

He has over 30 years’
experience in this fast-paced
and ever-evolving, dynamic
industry.

PREVIOUS APPOINTMENTS
Damon was previously
Non-Executive Director of
iannounce before its merger
with Legacy.com in May 2013.

RELEVANT SKILLS AND BUSINESS
EXPERIENCE
– Extensive digital and media

technology experience.

– Strong strategic and

PREVIOUS APPOINTMENTS
Rosie was previously an audit
partner at PwC.

RELEVANT SKILLS AND BUSINESS
EXPERIENCE
– Many years’ experience of

operating within the finance
sector.

– A broad range of plc Board

experience.

– Investment and corporate

transactions.

– Strong financial skills.

Rosie Shapland
Independent Non-Executive
Director

Damon Russell
Independent Non-Executive
Director

COMMITTEE MEMBERSHIP

commercial understanding.

COMMITTEE MEMBERSHIP

APPOINTED
May 20131

CURRENT EXTERNAL
APPOINTMENTS
Damon holds advisory roles
for a number of private
companies in the digital
media, sport and educational
sectors. He is currently Chief
Executive of Spoke Interactive,
a media service provider, and
a Director of The Dating Lab,
a business that provides online
dating services to some of the
world’s leading media brands.
Previously, he co-founded
Telecom Express, which was
sold to AMV BBDO, part
of the Omnicom Group. In
2004, Damon led a successful
management buyout.

– Significant experience in
alliances, ventures and
partnerships.

– Knowledge of service-

related industry
requirements and key client
relationships.

APPOINTED
November 20201

CURRENT EXTERNAL
APPOINTMENTS
Rosie is currently a Non-
Executive Director at
Foxtons Group plc, where
she is Chair of their Audit
Committee and a member
of their Remuneration and
Nomination Committees,
and PayPoint plc, where
she is Chair of their Audit
Committee and a member
of their Nomination and
Remuneration Committees.
Rosie is a Chartered
Accountant.

1. Damon was appointed Chairman

of the Risk Committee in
September 2020.

1. Rosie will succeed Chris Girling as
Chair of the Audit Committee in
July 2021.

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BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
BOARD OF DIRECTORS CONTINUED

NON-EXECUTIVE DIRECTORS CONTINUED

COMPANY SECRETARY

BOARD AND COMMITTEE MEMBERSHIP
As at 31 March 2021

RELEVANT SKILLS AND BUSINESS
EXPERIENCE
– Deep global capital markets
experience on both buy and
sell sides.

– Extensive knowledge
of central and local
government and experience
of policy development,
procurement and major
programme delivery.

– A track record of promoting

inclusion and diversity
and delivering meaningful
cultural change.

– Deep financial fluency

gained as a fellow of the
Chartered Institute of
Management Accountants
(CIMA).

– PLC Board experience.

Lesley-Ann Nash
Independent Non-Executive
Director

COMMITTEE MEMBERSHIP

APPOINTED
January 2021

CURRENT EXTERNAL
APPOINTMENTS
Lesley-Ann is currently a
Non-Executive Director of St.
James’s Place plc, where she
is a member of their Audit and
Risk Committees. Lesley-Ann
is a trustee of North London
Hospice

PREVIOUS APPOINTMENTS
Lesley-Ann was previously a
Director in the Cabinet Office
of HM Government and a
Managing Director at Morgan
Stanley, as well as having
previously worked at UBS and
Midland Bank.

BOARD

NOMINATIONS
COMMITTEE

AUDIT
COMMITTEE

REMUNERATION
COMMITTEE

RISK
COMMITTEE

EXECUTIVE
COMMITTEE

INVESTMENT
COMMITTEE

DISCLOSURE
COMMITTEE

Carmelina Carfora
Company Secretary

APPOINTED
March 2010

Carmelina is Secretary
to the Board and its
Committees, monitoring
compliance with its
procedures and providing
advice on governance
matters. At the direction
of the Chairman, she is
responsible for making
sure the Board receives
accurate, timely and
relevant information. She
also co-ordinates the
induction of new Board
members and the provision
of ongoing training and
development of the Board.

Carmelina’s other
responsibilities include:
corporate governance,
monitoring and compliance
with legislation (including
data protection legislation)
and the administration of
share schemes.

CHAIRMAN
Stephen Hubbard
Non-Executive Chairman
EXECUTIVE DIRECTORS
Graham Clemett
Chief Executive Officer
David Benson
Chief Financial Officer
NON-EXECUTIVE DIRECTORS
Chris Girling
Senior Independent
Non-Executive Director
Maria Moloney
Non-Executive Director
Suzi Williams
Non-Executive Director
Damon Russell
Non-Executive Director
Rosie Shapland
Non-Executive Director
Lesley-Ann Nash
Non-Executive Director
MEMBERS OF THE EXECUTIVE COMMITTEE
Angus Boag
Development Director
John Robson
Asset Management
Director
Claire Dracup
Head of People
Will Abbott
Chief Customer Officer
Richard Swayne
Investment Director
Carmelina Carfora
Company Secretary

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BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED

Q&A with the Executive Team

CARMELINA CARFORA
COMPANY SECRETARY

Q What changes in regulation have
you had to contend with this year
and has Brexit had an impact?

A The biggest challenge we found this

year was keeping the business and the
Board up to date with the very rapidly
changing law and regulation relating to
Covid-19. This included issues around
health and safety but also making
sure that we held a valid AGM despite
Government restrictions and, of course,
constantly making sure we were
considering our obligations under the
Market Abuse Regulation.

As an entirely UK-focused business,

Brexit has not had a major impact on
us from a regulatory point of view.
We had to update some policies to
make sure they referred to the new
UK law versions of former EU laws,
and we did some work to ensure our
data protection compliance was not
affected.

We received very
positive feedback on the
unconscious bias training
we held during the year.

Q Over the last year, there has been
a greater spotlight on diversity
and inclusion. What is Workspace
doing in this area?

A This has been an area of great focus for

Workspace this year.

The Executive Committee and all senior
managers attended full day training
sessions on unconscious bias and we
plan to roll training out to all employees
following the very positive feedback
we received.

We have reviewed our recruitment

process and are producing interview
guides, as well as working more closely
with recruitment agencies to improve
the diversity of job applicants.

Finally, we plan to improve our data
collection and analysis in this area
so that we can better report and
measure progress.

Carmelina keeps the
Board up to date and
informed, as well as
advising the business on
all corporate governance
matters.

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BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED

Board activities
2020/21

Principal Board activities
during 2020/21

The Board met nine times during the year, including the
Annual General Meeting. Details of Director attendance
can be found on page 105.

Since and including March 2020, all full meetings of
the Board and its Committees have, in the main, been
conducted virtually with full attendance. The agendas
have been developed with active consideration of
the status of the Covid-19 pandemic and the current
priorities of the Group.

One meeting every year is arranged specifically to
consider the Group’s strategy and the five-year plan.
The Board discusses market trends, capital structure,
portfolio evolution and other strategic matters
impacting the long-term success of the Group.

An overview of our Board’s key activities is detailed
to the right.

Corporate reporting
and performance
monitoring
– Regularly reviewed the Group’s
financial structure and rolling
forecasts and approved the
2020/21 budget.

– Approved the issuance of

a green bond in March 2021
(see pages 115 and 123).
– Approved the extension of
the revolving credit facility
(see page 115).

– Recommended the payment of the
final dividend paid to shareholders
in August 2020. See page 74 for
more information on dividends.

– Reviewed and approved the
full and half-year results and
trading statements.

– Conducted a review of the

Company’s viability over the next
five-year period (see page 81).

Strategy

Stakeholder
engagement

– An annual strategic review in

September 2020 to approve the
five-year plan. Members of the
Executive Committee joined the
Board to provide insights and
stimulate discussion on a number
of different topics. Following
the strategy day, certain ideas
generated were further considered
and refined for incorporation into
the business plan.

– We sought presentations from

external advisers who provided
an update on the property and
equity markets.

– Considered the impact of Brexit,
Covid-19 and market uncertainty
on our business.

Operations

– Updates considered with regard to
customer support during Covid-19
and the implementation of social
distancing measures to benefit
customers.

– Requested updates on the social
media campaign and marketing
programme targeting the easing
of restrictions and return to
the office.

– Received updates on our investor
engagement programmes and
received reports from brokers
and analysts.

– Received an update from the
Chairman on his employee
engagement meetings with staff
in his role as NED responsible for
employee engagement. See pages
118 to 119.

– The Chief Executive Officer

provided regular updates on
employee communication and
engagement during Covid-19
lockdown periods. See page 118 for
employee engagement activity.

Property portfolio,
development and
investment
– Provided with regular updates on
asset management, leasing and
investment activities.

– Received an update on planned

and key refurbishment and
redevelopment projects.

– Reviewed and approved the half-
and full-year valuations of the
Group’s property portfolio.

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BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
BOARD ACTIVITIES 2020/21 CONTINUED

Risk management
and internal control
– Reviewed the Group’s principal
risks and considered emerging
risks which could impact the five-
year plan.

– Requested verbal updates

from the Chairman of the Audit
Committee and, more recently, the
Chairman of the Risk Committee
on the key areas discussed.
See pages 149 to 166 for work
performed by both Committees.

People and
succession planning
– Approved changes to the Board

with the appointment of two new
Non-Executive Directors, Rosie
Shapland and Lesley-Ann Nash.
See page 140 for details of the
recruitment process.

Governance

– Participated in an externally

facilitated evaluation of the Board,
its Committees and all Directors.
– Performed an annual review of the
Committees’ terms of reference.
– Reviewed the membership of the
Board Committees. A number of
changes were approved, which
included the formation of a Risk
Committee (see page 161 and
changes to the membership of
the Remuneration Committee
(see page 169).

– Considered conflicts of interest

and related parties.

– Reviewed regular governance
updates from the Company
Secretary.

– Discussed a legal update from the
Group’s legal advisers, Slaughter
and May.

ESG

– Requested updates from the Head
of Sustainability on the Group’s
ESG targets.

– Approved and published our

strategy to become a net zero
carbon real estate portfolio by
2030 (see www.workspace.co.uk/
investors for our net zero carbon
pathway).

The Light Bulb

CASE STUDY
Net zero
carbon
pathway

In January 2021, the Group
published its pathway
to becoming a net zero
carbon business by 2030,
further demonstrating our
commitment to minimising
the impact of our operations
on the environment. The
Board were fully supportive
of the approach and
approved the net zero
carbon pathway strategy
following presentations from
the CEO and our Head of
Sustainability.

See page 40

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BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
BOARD ACTIVITIES 2020/21 CONTINUED

Purpose, values
and culture

Values

See page 17

Our stakeholder
engagement
programme

See page 20

Section 172(1)
Statement

See page 122

STRATEGIC LINK

Customer-led growth
Doing the Right Thing

Our purpose, to give
businesses the freedom
to grow, provides the
Group with an aspirational
framework for making
decisions, accomplishing
tasks and interacting with
stakeholders. Our purpose
informs our values, which
in turn set the cultural tone
for the Group. Our culture
is one of transparency.
Workspace is committed to
a free and open culture in
dealings between its officers,
employees, customers,
suppliers and all other
stakeholders. Our purpose,
values and culture are
described in detail throughout
the Strategic Report.

The Board sets the Group’s
strategy and makes
decisions through the lens
of our purpose, values and
culture. Our Section 172(1)
Statement on pages 122
to 123 provides further
detail on how the Board
considers its stakeholders
when making decisions.
The Board also approves
the Group’s key policies
and practices so that they
underpin the Group’s values
and culture. The Executive
Committee is responsible for
communicating these policies
throughout our business.

During the year under
review, the Board has
continued to assess how our
purpose is articulated and

understood by our customers,
employees, investors and
other stakeholders, and how
our values and culture are
embedded throughout our
business. The Board monitors
this by meeting with, and
receiving regular reports
from, executive management.
These reports include
information gleaned from
our stakeholder engagement
activities, including customer
and employee surveys
and feedback from staff
interactions with customers
and suppliers. The Board also
maintains an active dialogue
with shareholders and the
Chairman regularly meets
with employees in his role
as the designated Director
for employee engagement.

CASE STUDY
Putting our
values into
action

Our purpose and values sit
at the heart of our brand.
This year, we used these to
define a new tone of voice
as we developed our brand
positioning.

A clear tone of voice
creates consistency across
all customer touchpoints
and reflects our brand and
culture. In all internal and
external communication we
strive to be Positive, Original,
Warm and Assured.

To embed this in the business,
the marketing team held
tailored workshops for each
department to help teams
adopt the tone of voice.

All teams have now
completed this with the
majority already using the
new tone of voice in their
daily communications.

See page 16

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BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
BOARD ACTIVITIES 2020/21 CONTINUED

Workforce
policies and
practices

We expect all the
Group’s officers and
employees to conduct
themselves and our
business with honesty
and integrity.

STRATEGIC LINK

Doing the Right Thing

Policies and procedures
The Board reviews and
approves all key policies and
practices which could impact
our employees and influence
their behaviours. Policies are
reviewed to check that they
are aligned with the Group’s
values. This includes the
Group’s Code of Conduct
and its additional policies
relating to anti-bribery
and corruption, modern
slavery, data protection and
whistleblowing. Further
information on the Group’s
key compliance policies can
be found on pages 83 to 85.

Training and communication
All policies are available to
employees and published
on the Group’s intranet, with
some also included in the
employee handbook. We
also take the opportunity
to remind employees of our
policies and any changes

made to them through
our internal monthly
publication, ‘The Workspace
Wrap’. In addition, all new
employees are provided
with training at induction
sessions and we provide
annual refresher training to
all staff in data protection
and other key areas.

Whistleblowing
The Board recognises
that effective and honest
communication is essential
to maintain our business
values, and we encourage
our employees to speak out if
they witness any wrongdoing.
This is reinforced in our
whistleblowing procedures
and in our Code of Conduct,
both of which can be found
on our intranet. See page
85 for further details on our
Whistleblowing Policy.

Workforce remuneration
policies
The Remuneration Committee
has oversight of wider
remuneration practices and
policies. A schedule of the
remuneration arrangements
applicable to the wider
workforce was presented to
the Committee during the
year. The Committee was
satisfied that the schedule
was clear and comprehensive
and that no further
information was required at
that time. As appropriate
and by invitation, the CEO
attends the Remuneration
Committee, for example
in May 2020, when he
provided an overview of
remuneration for members
of the Executive Committee
and their direct reports.

CASE STUDY
Employee
inductions

This year our new Training
Manager reviewed and
improved our staff induction
process. Inductions are now
held on a monthly basis, with
new employees undertaking a
2.5 day induction programme
to introduce them to
Workspace. The induction
begins with an introduction
to the Group’s strategy by
a member of the Executive
Committee, followed by
sessions on key areas such
as customer journey, brand
and marketing, sustainability,
health and safety, security, IT,
HR and compliance. The HR
and compliance sessions are
used in particular to inform
employees of the Code
of Conduct and the other
policies and procedures that
they are required to follow.

See page 45

Brickfields

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BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
BOARD ACTIVITIES 2020/21 CONTINUED

Financing

STRATEGIC LINK

Operational excellence
Doing the Right Thing

Health and safety

During the year, the Group has
secured ongoing financing,
by issuing its first green bond
and extending its existing
revolving credit facility.

Green bond
In March 2021, the Group
issued its first green bond,
in connection with our new
Green Finance Framework,
following strong demand from
institutional investors.

The bond is a Sterling-
denominated senior
unsecured guaranteed
green bond issuance in an
aggregate principal amount
of £300m and for a term
of seven years, bearing
interest at a rate of 2.25%
per annum. The bonds were
admitted to the Official List
of the Irish Stock Exchange
plc (trading as Euronext
Dublin) and to trading on

The Global Exchange Market
of Euronext Dublin with a BBB
rating. Following their issue,
the Company’s average debt
facility maturity increased
from 3.9 years to 4.9 years
and its weighted average cost
of debt reduced to 3.6%.

The proceeds will be used to
finance or refinance eligible
green refurbishment and
redevelopment projects,
reinforcing the key role
Workspace plays in the
employment-led regeneration
of areas across London as a
long-term owner of historic
and character buildings
in the capital. The Green
Finance Framework has
received a second party
opinion from DNV, an
external environmental,
social and corporate
governance research and
analysis provider, confirming

its alignment with the
International Capital Market
Association’s Green Bond
Principles. Both the Green
Finance Framework and the
second party opinion are
available on the Company’s
website at: https://www.
workspace.co.uk/investors/
doing-the-right-thing/
introduction

See pages 42, 78 and 123
for further information on
the green bond.

RCF extension
During the year, the
Company also agreed
a one-year extension to its
existing revolving credit
facility, which was due to
mature in June 2022.

STRATEGIC LINK

Doing the Right Thing

Health and safety has been
a key area of focus for the
Board throughout this
year, particularly due to
Covid-19. The wellbeing of
our employees, customers
and suppliers was the Board’s
highest priority and the
Board has been in regular
dialogue with the Executive
Committee on the steps being
taken to make our business
centres safe. The Board was
kept up to date with new
Covid-19-related legislation
and guidance affecting the
Company at all times.

Our business centres
Risk assessments relating
to the use of our head
office and business centres
by employees, customers,
suppliers and other visitors
were conducted, and
are updated at regular
intervals. Various policies
and procedures have been
put in place to ensure the
health and safety of everyone
using our business centres,
including additional cleaning
and provision of hand
sanitiser, signage reminders
about social distancing and
hygiene, one-way systems
and restrictions on the
number of people permitted
in enclosed spaces such as
meeting rooms and lifts.
These policies and procedures
were, and continue to be,
regularly reviewed and
updated to take into account
changing law and guidance.

Further information on
the measures taken can
be found on page 201.

Staff wellbeing
The Board is particularly
conscious of the potential
impact of Covid-19 and home
working on the Group’s
employees. Our staff have
been kept up to date with
our Covid-19 policies and
procedures through central
communications and through
their line managers, and
several mental health-focused
seminars have been offered to
employees.

Further information on the
Group’s health and safety
activities can be found on
page 200.

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BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
BOARD ACTIVITIES 2020/21 CONTINUED

Shareholder engagement

STRATEGIC LINK

Operational excellence

292

During 2020/21, we engaged
with 292 current and potential
institutional investors

In 2020/21, we attended four
virtual conferences

meetings and conferences
held virtually. Unfortunately
we were unable to conduct
investor tours during the
year. Tours and site visits are
a valuable tool for educating
investors on our offer and
showcasing our properties
and we look forward to
restarting these as soon as
restrictions allow.

Investor meetings and
conferences
During 2020/21, we engaged
with 292 institutional
investors via virtual meetings
or calls. Investor meetings
are attended by various
senior executives, including
the CEO, CFO, Chairman,
Senior Independent Director
and Executive Committee
members, as well as the Head
of Investor Relations and the
Head of Finance.

We regularly participate
in industry and property
conferences globally. These
were all held virtually in
2020/21 but we attended
four investor conferences.

Engaging with shareholders
We have an active and
constructive dialogue with
our shareholders, and we
regularly seek their views
on major issues such as
governance, strategy and
financial structure. The
Board receives a monthly
investor relations report,
recording movements in
the shareholder register
and a record of investor
engagement, including any
notable views expressed by
investors in meetings with
management. Our Investor
Relations team manages a
comprehensive calendar
of engagement, including
formal announcements,
conference calls, roadshows,
AGM and events, as well as
ad hoc outreach contact with
financial analysts, business
media, investors, private
client fund managers, retail
investors and equity sales
teams to make sure that our
strategy and value creation
are well understood by both
shareholders and influencers.

The Government restrictions
around movement as a
result of Covid-19 impacted
shareholder engagement
during the year, with all

OUR INVESTOR RELATIONS CALENDAR OF EVENTS

Calendar of events

Investor
meetings

Investor
tours

2020/21

April

May

June

July
August
September

October
November

December
January
February
March

Business update on impact
of Covid-19 pandemic

Investor engagement
UK Property Conference

Full-year results

Virtual investor roadshow
AGM & Q1 Business Update

Half-year end

UK Property Conference

Half-year results

Virtual investor roadshow

Q3 Business Update

Year-end

Fixed income investor
roadshow for green bond

US and EMEA property
conferences (virtual)

–

Debt market
This year, we issued our
first corporate green bond,
raising £300m to finance
and refinance eligible green
projects. We conducted
a fixed income investor
roadshow ahead of the
issuance and investors were
very supportive with the bond
oversubscribed. The CEO and
CFO also regularly engage
with our private placement
investors, primarily based in
the US, so that they remain
fully informed of corporate
developments and to discuss
financial performance, future
strategy and cash flows.

Annual General Meeting
(‘AGM’)
The 2020 AGM was held
on 9 July 2020 as a closed
meeting at Canterbury Court,
Kennington Park, 1-3 Brixton
Road, London SW9 6DE. All
resolutions passed with over
90% votes in favour.

Our 2021 AGM will be held
on Thursday 22 July 2021
at Edinburgh House, 170
Kennington Lane, London,
SE11 5DP. Safeguarding the
health and safety of our
employees, shareholders
and guests is a priority.

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BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
BOARD ACTIVITIES 2020/21 CONTINUED

Senior Independent Director
If shareholders have any
concerns, which the normal
channels of communication
to the CEO, CFO or Chairman
have failed to resolve,
or for which contact is
inappropriate, then our Senior
Independent Director, Chris
Girling, is available to address
them.

Other shareholder contacts
Contact details for our
Investor Relations team,
Company Secretary and
Company Registrars are
available on page 243 of
this report as well as on our
website.

Shareholder engagement continued

At the time of publication of
this report, we are expecting
restrictions on gatherings
to be lifted by the date of
the AGM and therefore we
intend to hold the AGM
in person as we would in
normal years. Any changes
to these arrangements will be
announced via the Regulatory
News Service. We will make
sure all necessary social
distancing measures are taken
to enable the AGM to proceed
safely and, as a result, we will
be limiting attendance to the
Company’s shareholders,
members of the Board and
other necessary attendees
only. With health and safety
in mind, we would encourage
shareholders to consider
voting by proxy rather than
attending in person if they
feel able to do so.

Shareholder engagement
remains a priority for
Workspace. As we did last
year, we encourage all our
shareholders to submit
questions for the Board in
advance of the AGM, and
answers will be published
on the Company’s website.
Further details can be found
in the AGM Notice.

Annual Report
Our Annual Report is
available to all shareholders.
Through our electronic
communication initiatives,
we aim to make our Annual
Report available to a universal
audience. Shareholders
can opt to receive a hard
copy in the post or PDF
copies via email or from
our website. Additionally,
if a shareholder holds their
shares via a nominee account
and encounters difficulty
receiving our Annual Report
via their nominee provider,
they are welcome to contact
the Company Secretary to
request a copy.

Corporate website
We have upgraded our
website during the year,
including the investor
site. The web address is
www.workspace.co.uk/
investors. It contains our
Annual Reports, half- and
full-year results presentations
and our financial and dividend
calendar for the upcoming
year. Our website also outlines
our company strategy,
business model, property
portfolio and has a detailed
section covering our ESG
activities.

Will Abbott

CASE STUDY
Capital
Markets Day

Just after the year end, we
held a virtual capital markets
day to provide investors and
analysts with a deep dive into
our marketing capabilities
and new brand proposition.

Will Abbott, Chief Customer
Officer, took centre stage to
unveil the brand proposition,
Home to London’s Brightest
Businesses, before outlining
Workspace’s unique strength
in marketing and the value
of its in-house operating
platform.

Dearbhla Mac Fadden,
appointed Head of Marketing
during the year, then
presented the new brand
advertising campaign, set to
go live in May 2021.

Investor feedback was
positive, with attendees
commenting that the event
showcased Workspace’s
unique position in the market.

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BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
BOARD ACTIVITIES 2020/21 CONTINUED

Employee engagement

STRATEGIC LINK

Doing the Right Thing

The objective was to
clearly differentiate his role
from that of the CEO’s.
The communications also
aimed to provide greater
transparency to staff around
the Chairman and Board’s
corporate governance role
in the Group’s long-term
sustainable success, including
supporting our purpose,
values and strategy.

A series of email and intranet
communications outlined
Stephen’s priorities, with
emphasis on sustainability
and Group culture, and
thanked employees for
steering the business through
the Covid-19 crisis.

Throughout the year the
Board meets and receives
feedback from a wide range
of employees across the
business. The Board and
Executive Committee review
and approve key policies,
practices and strategic
decisions, making sure that
they align to the Group’s key
values and purpose.

This year efforts were made
to increase open engagement
between employees and
the Board.

New Chairman
Following the appointment
of Stephen Hubbard as the
new Chairman, an internal
communications plan was
developed to help introduce
Stephen to staff and position
him as the Board’s employee
engagement representative.

The Board’s employee
engagement programme
was launched with Stephen
carrying out formal and
informal meetings with staff
at head office and other
business centres. Shortly
afterwards, the Chairman’s
quarterly breakfast
engagement sessions started
in September 2020. See
page 119 for further details.

New Non-Executive
Directors
Induction sessions were
organised for new Non-
Executive Directors, involving
meetings with a range
of senior employees and
external advisers to build
a solid understanding of
the Group. Due to Covid-19
restrictions, tours of our major
business centres have been
postponed but will take place
later in 2021.

Our two new Non-Executive
Directors, Rosie Shapland
and Lesley-Ann Nash, were
introduced via the monthly
staff newsletter, The Wrap,
in the lighter, human-interest
Q&A section, asking them
questions about their hobbies
and interests outside of work.

Workspace Winners Awards
This year we launched
the Workspace Winners
employee awards to celebrate
our values and culture in
action, and to recognise
employees who have excelled
or had a positive impact on
the business. The creation
of the four quarterly awards
received strong support from
the Board. The judging panel
comprises a Board member
and CEO Graham Clemett,
alongside six members of
staff from across the business,
who are responsible for
choosing winners whose
actions align to our values.

Town hall events
With many staff working from
home during lockdown, we
broadcast three live-streamed
employee events to help
bring everyone together
and share business updates
from senior management.
Board members Graham
Clemett, CEO, and Dave
Benson, CFO, hosted a Teams
update to run staff through
highlights from the half-year
financial results. Two further
events included updates
from Graham and other
members of the Executive
Committee. Employees were
able to submit questions
anonymously, which Graham
answered live. A recording of
each event was shared on the
Group’s intranet.

70%

of employees logged into the
virtual employee updates

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BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
BOARD ACTIVITIES 2020/21 CONTINUED

Employee engagement continued

Stephen Hubbard hosts an engagement session at The Frames

CASE STUDY
Chairman’s breakfast sessions

The discussions proved
especially useful in gauging
employee sentiment
regarding working from
home, effectiveness of social
distancing measures, how our
Covid-19 customer support
has been received and views
on the competitor landscape.

Ideas discussed are fed back
to the Board and ultimately
help inform improvements to
the business.

Employees were invited to
put themselves forward for
monthly breakfast sessions
with the Chairman, Stephen
Hubbard, to discuss the
Workspace business. Hosted
in small groups across a
variety of business centres,
the engagement events were
positioned as a forum for
employees to provide candid
feedback or suggest ideas:

– Each session involves a

different and diverse group
of eight employees
– Chatham House Rules
apply, meaning notes
are taken but comments
remain anonymous

– Groups were chosen to

represent a diverse cross
section of the Company
from both centre and head
office staff

See page 22

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BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
BOARD ACTIVITIES 2020/21 CONTINUED

Business relationships

STRATEGIC LINK

Customer-led growth
Operational excellence
Doing the Right Thing

Our customer-facing
teams provide ongoing
daily feedback from
customers, from the initial
viewing through their entire
relationship with us.

We have numerous suppliers
and partners across
development, facilities
management and finance,
and we work hard to ensure
our values are aligned and
that we are working toward a
common goal.

Engaging with customers,
suppliers and partners
Maintaining positive
relationships with our
customers, suppliers and
partners is essential in our
ongoing success.

The Board recognises the
contribution that these
businesses make to our
ongoing operation.

Effective corporate
governance principles rely
on open, transparent and
productive stakeholder
engagement, and we
work hard to incorporate
stakeholders’ views into our
decision-making process.

The Board engages with key
stakeholders on a regular basis
to identify strategic actions,
for example approving the rent
discount offered to customers
during the pandemic.

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BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
BOARD ACTIVITIES 2020/21 CONTINUED

Community and
environment engagement

STRATEGIC LINK

Doing the Right Thing

Environment engagement
The Board has supported
a variety of impactful
environmental initiatives
throughout the year and has
received presentations from
the Sustainability team on
a range of topics including:
net zero carbon target,
science-based targets, Task
Force on Climate-related
Financial Disclosure (TCFD),
customer engagement, Energy
Performance Certifications
(EPCs) and ESG objectives
and targets.

This year, the Board also
endorsed the decision to
divide the Doing the Right
Thing Committee into two
separate groups: the Charity
& Social Committee, which
will focus on fundraising,
volunteering and social
activities, and the ESG
Committee, which will focus
on the environmental, social
and governance aspects of
our business and supply chain.

Pathway to net zero carbon
emissions by 2030
The Board recognises that the
building industry significantly
contributes to the global
carbon footprint. Following
a review of Workspace’s
business and value chain
emissions, the Board strongly
endorsed our pathway
document, outlining how we
will become a net zero carbon
business by 2030. This marks
a significant acceleration of
our commitments previously
made as part of the Better
Buildings Partnership (BBP)
Climate Change Commitment
to deliver a net zero carbon
real estate business by 2050.

The green bond
The Board approved the
issue of our first green bond,
to raise £300m of debt to
finance/refinance green
refurbishment projects, such
as Brickfields in Hoxton.

Community and social
impact
The Board receives updates
from the Sustainability team
on our community and social
impact work, including our
InspiresMe programme
supporting disadvantaged
young people in London. This
year we organised virtual CV
and interview workshops with
charities XLP and Inspire.

The Board is also kept
appraised of fundraising
activities, including for our
charity partner Great Ormond
Street Hospital and Kitchen
Social to fund school meals
for children.

The Board has endorsed our
plans to bring all third-party
contractors onto the Living
Wage by April 2022.

All new Board members now
receive ESG inductions from
our Sustainability team.

£300m

green bond to finance/refinance
green refurbishment projects

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BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED

Section 172(1) Statement

Further detail on stakeholder engagement and Section 172(1) matters can be
found throughout our Annual Report:

The Board of Workspace Group PLC confirms that during
the year it has acted in good faith to promote the long-term
success of the Company (and its Group) for the benefit of its
shareholders, while having due regard to the matters set out
in Section 172(1) of the Companies Act 2006, being:

F
The need to act
fairly between
members of the
Company

E
The desirability
of the Company
maintaining a
reputation for
high standards
of business
conduct

A
The likely
consequences
of any decision
in the
long term

D
The impact of
the Company’s
operations on
the community
and the
environment

B
The interests
of the
Company’s
employees

C
The need to foster
the Company’s
business relationships
with suppliers,
customers
and others

A. The likely

Our Purpose

Relevant Disclosures

consequences of
any decision in the
long term

B. The interests of
the Company’s
employees

Our business model

Our strategy and approach
to market trends

Dividend

Employee engagement

Page

page 113

pages 11 to 19

pages 26 to 33

page 2

page 118

Looking after our people

pages 45 to 49

Diversity and inclusion

pages 47 and 145

C. The need to foster
the Company’s
business
relationships with
suppliers, customers
and others

Customer support

Supplier engagement

Anti-bribery & corruption
and modern slavery

page 50

page 84

D. The impact of

Supporting our communities

pages 51 to 56

Sustainability and TCFD

pages 86 to 98

the Company’s
operations on the
community and the
environment

E. The desirability
of the Company
maintaining a
reputation for
high standards of
business conduct

Net zero carbon pathway

Green financing

Compliance policies

Culture and values

Whistleblowing

Internal controls

page 40

page 42

pages 84 to 85

page 113

page 85

page 164

page 116

page 201

The Board has identified the Company’s key stakeholders to
be its shareholders, employees, customers, suppliers, debt
financiers and local communities, and also considers the impact
of operations on the environment to be of key importance.

F. The need to act

Shareholder engagement

fairly as between
members of the
Company

AGM

How the Board considers
Section 172(1) matters
The Board is fully aware of the need to
consider Section 172(1) when making decisions.
Some of the key methods used by the Board to
achieve this include:
– A Board strategy day is held each year
where the Board discusses long-term
strategy (see page 111).

– The Board regularly considers the Group’s
purpose, values and policies related to
business conduct (see pages 113 and 114).
– A stakeholder impact analysis, setting out
the expected impacts of the proposed
decision on different stakeholder groups
and how any negative impacts might be
mitigated, is conducted and discussed by
the Board when key strategic decisions are
proposed.

– A Board Risk Committee was established
this year to oversee the Company’s risk
management framework and the actions
that are in place (or will be put in place)
to mitigate risk in the short, medium and
long term (see page 161).

– The Board considers ESG matters

(see page 121).

– The Board directly engages with employees
and investors, and receives feedback from
the CEO and CFO on meetings with investors
and analysts, and regular reports from the
Executive Committee and external advisers
on engagement with other stakeholders
such as customers, suppliers and the wider
community (see pages 116 to 121).

– Stephen Hubbard, Chairman of the Board,

holds focus groups with employees in his role
as the designated Non-Executive Director
for employee engagement (see page 119).

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Contents

BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
SECTION 172(1) STATEMENT CONTINUED

Key decisions
in 2020/21

Supporting customers
with a 50% absolute
rent reduction

Publishing our net zero
carbon pathway

Launching our first
green bond

Some of the key decisions considered by
the Board in 2020/21, and how the Board
had regard to Section 172(1) matters when
discussing them, are outlined to the right.

In addition, this year the Board has in particular
had regard to Section 172(1) matters in its
response to Covid-19. In addition to supporting
our customers with a rent reduction, the Group
has been focusing on implementing measures
to protect its strong financial position,
supporting its employees while working
from home and on their return to work,
offering wellbeing events and resources to its
employees and customers, and making sure
our business centres are a safe and hygienic
environment for our customers, employees,
suppliers and visitors.

Read more about our response to Covid-19
on pages 16, 45, 47, 50, 63, 115 and 201.

The Government restrictions on movement
put in place in March 2020 as a result of the
Covid-19 pandemic had an immediate and
material effect on the businesses of many
of the Group’s customers. The Group began
offering its business centre customers the
opportunity to defer a proportion of their
rent payments on a case-by-case basis, but
it became increasingly apparent that many
customers were experiencing significant
reductions in income and cash flow. Guided
by its commitment to Doing the Right Thing,
in April 2020 the Group decided to go
further and offer a rent reduction of 50% to
customers in business centres affected by the
Government restrictions, to apply from the
start of lockdown on 24 March until 30 June
2020. The Board received detailed information
from the Executive Committee supporting
this decision. It was clear that sharing the
burden of a challenging and uncertain period
would have a positive impact on fostering
the Group’s relationships with customers
in the immediate term. The short-term
negative impact on revenue, and therefore
potentially to shareholder returns, as a result
of the discount was also considered, but the
Board balanced this against the longer-term
customer retention and loyalty this decision
was expected to generate. It was concluded
that it would ultimately be to the benefit of the
Group’s success in the long-term and the long
term interests of its shareholders as well as to
the benefit of its customers. See page 50 for
further information on the rent reduction.

In January 2021, the Group published its
net zero carbon pathway, setting out its
commitment to becoming a net zero carbon
business by 2030 through reducing the
Group’s operational and embodied carbon
emissions in alignment with the goal of limiting
global warming to 1.5°C. In making its decision
to approve the publication, the Board received
presentations from executive management
and the Group’s Head of Sustainability, and
discussed in detail the likely impact of the
Company’s commitment to its net zero carbon
pathway, particularly in the long term. As well
as the clear benefits to the environment, the
Board noted that ESG matters have become
increasingly important to all the Group’s
stakeholders. In particular, the Group’s
customers are increasingly interested in
energy saving and recycling, its employees
want reassurance that they are working for
a responsible business and its investors seek
greater transparency on climate-related risks
and mitigations. The Board concluded that the
net zero carbon pathway would be to the clear
benefit of the Group and its stakeholders. See
page 40 for further information on our net zero
carbon pathway.

In March 2021, the Board approved the
launch of the Company’s first green bond,
in connection with the Group’s new Green
Finance Framework and following strong
institutional demand. The Board reviewed
and discussed in detail information from
executive management and external advisers.
In considering the impact it would have on the
Group’s stakeholders, the Board particularly
noted the positive impact the green bond was
expected to have on the Group’s commitment
to the environment and local communities.
The proceeds will be used to finance or
refinance eligible green refurbishment and
redevelopment projects (in line with its
Doing the Right Thing strategy and its net
zero carbon pathway), reinforcing the key
role Workspace plays in the employment-led
regeneration of areas across London as a long-
term owner of historic and character buildings
in the capital. The Board also considered
that the green bond would be in the interests
of other stakeholder groups. The issue of
the bond improves the Company’s balance
sheet and reduces its average cost of debt,
thereby strengthening the Company’s financial
position to the ultimate benefit of its investors,
employees, customers and suppliers. See
pages 42 and 115 for further information on our
green bond and Green Finance Framework.

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DIVISION OF RESPONSIBILITIES

Contents

Carmelina Carfora
Company Secretary

There is a clear division
between executive and
non-executive responsibilities.
This provides a framework of
accountability and oversight.

Overview

Board role and responsibilities

Our governance framework

How we govern

page 125

page 126

page 128

page 129

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DIVISION OF RESPONSIBILITIES CONTINUED

Overview

Our governance
framework

Our governance framework supports the
development of good governance practices
across the Group. The Board has overall
responsibility for governance within the Group.

The Board delegates certain of its
responsibilities to its Audit, Risk, Nominations
and Remuneration Committees. Further
details of the work, composition, role and
responsibilities of the Audit, Risk, Nominations
and Remuneration Committees are provided in
separate reports on pages 136 and 197. Each of
the Committees has Terms of Reference which
were reviewed by the Committees and the
Board during the year. These are available on
the Group’s website at www.workspace.co.uk/
investors/about-us/governance/committee-
terms-of-reference. The performance of each
of the Committees is assessed annually as part
of the evaluation process described later in
this report.

The Board delegates all operational matters
to the Executive Committee, except for
matters specifically reserved to the Board.
The schedule of matters reserved for the
Board is reviewed at least once a year and
can be accessed on the Company website
at www.workspace.co.uk/investors/
about-us/governance/committee-terms-
of-reference. Further information on the
relationship between the Board and the
Executive Committee, and the matters which
are reserved to the Board, can be found on
page 131.

Complying with the
Code Principles

PRINCIPLE F
The chair leads the board and is
responsible for its overall effectiveness
in directing the company. They should
demonstrate objective judgement
throughout their tenure and promote
a culture of openness and debate.
In addition, the chair facilitates
constructive board relations and
the effective contribution of all non-
executive directors, and ensures that
directors receive accurate, timely and
clear information.

Read about the role of our Chair on
page 126.

PRINCIPLE H
Non-executive directors should have
sufficient time to meet their board
responsibilities. They should provide
constructive challenge, strategic
guidance, offer specialist advice and
hold management to account.

PRINCIPLE G
The board should include an
appropriate combination of executive
and non-executive (and, in particular,
independent non-executive) directors,
such that no one individual or small
group of individuals dominates the
board’s decision-making. There should
be a clear division of responsibilities
between the leadership of the board
and the executive leadership of the
company’s business.

Read about our Board composition
on pages 106 to 108.
Read about the independence of our
Non-Executive Directors on page 129.
Read about the division of
responsibilities between the Board
and Executive Committee on pages 126
to 127 and 131.

PRINCIPLE I
The board, supported by the company
secretary, should ensure that it has
the policies, processes, information,
time and resources it needs in order to
function effectively and efficiently.

Read about the role of our Non-
Executive Directors on page 129.
Read about the time commitment
required of Non-Executive Directors
on page 129.

Read about the Company Secretary’s
role in supporting the Board on page 127.
Read about information flow and support
to the Board on pages 134 to 135.
Read about training and development
for the Board on page 135.

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Contents

DIVISION OF RESPONSIBILITIES CONTINUED

Board roles and
responsibilities

Non-Executive

The roles and responsibilities of the Chairman
and Chief Executive Officer are separate, with a
clear division of responsibilities between them.
The Chairman is responsible for the leadership
of the Board, and the Chief Executive Officer
manages and leads the business. In addition,
the role specifications described on the right
set out the clear division of responsibility
between executive and non-executive
members of the Board.

CHAIRMAN:
STEPHEN HUBBARD
– Primarily responsible for the operation, leadership

and overall effectiveness of the Board.

– Sets agendas which support efficient and balanced

decision-making.

– Ensures that the Board plays a full and constructive part in
the development of the Group’s strategy and that there is
sufficient time for boardroom discussion.

– Facilitates the effective contribution of the Non-Executive
Directors and monitors that all Directors receive accurate,
timely and clear information.

– With the Nominations Committee, monitors that the Board

remains appropriately balanced to deliver the Group’s
strategic objectives and to meet the requirements of good
corporate governance.

– Promotes effective engagement with the Group’s

shareholders and other key stakeholders.

SENIOR INDEPENDENT DIRECTOR:
CHRIS GIRLING
– Being available and providing an alternative communication
channel for shareholders and other stakeholders, if required,
and being available to meet with investors on request.

– Provides a sounding board for the Chair.
– If necessary, deputises for the Chairman in his absence

and counsels all Board colleagues.

– Acts as an intermediary for Non-Executive Directors

when necessary.

– At least annually leads a meeting of the Non-Executive
Directors without the Chairman present, to appraise the
Chairman’s performance and address any other matters
which the Directors might wish to raise. He then conveys
the outcome of these discussions to the Chairman.

INDEPENDENT NON-EXECUTIVE DIRECTORS:
CHRIS GIRLING, DAMON RUSSELL,
SUZI WILLIAMS, MARIA MOLONEY,
ROSIE SHAPLAND AND LESLEY-ANN NASH
– Constructively challenge and assist in the development

of strategy.

– Scrutinise, measure and review the performance

of management.

– Promote the highest standards of integrity

– Oversees the annual Board evaluation and identifies any

and corporate governance.

actions required.

– Leads initiatives to assess the culture across Workspace

and ensures that the Board sets the correct tone.

– Review the succession plans for the Board
and key members of senior management.

– Determine appropriate levels of remuneration

– Reviews, with the Board, diversity and inclusion initiatives.

for the senior executives.

The Chairman is not involved in an executive capacity with
any of the Group’s activities.

of risk management and financial controls.

– Serve on or chair various Committees of the Board.

– Review the integrity of financial reporting and the systems

DESIGNATED NON-EXECUTIVE DIRECTOR FOR EMPLOYEE ENGAGEMENT:
STEPHEN HUBBARD
– Represents the Board in discussions with employees.
– Develops, implements and provides feedback on employee
engagement initiatives in conjunction with management.

– Provides an employee voice in the boardroom.
– Communicates to employees the outcomes and

developments made by the Board on specific matters.

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Contents

DIVISION OF RESPONSIBILITIES CONTINUED
BOARD ROLES AND RESPONSIBILITIES CONTINUED

Executive

CHIEF EXECUTIVE OFFICER:
GRAHAM CLEMETT
– Responsible for leading and managing the business and is
accountable to the Board for the financial and operational
performance of the Group, and the execution of the
strategy set by the Board.

– Leads the Group Executive Committee in the day-to-

day running of the Group’s business in order to execute
objectives successfully.

CHIEF FINANCIAL OFFICER:
DAVE BENSON
– Supports the CEO in developing the strategic direction of
the Group and works closely with the CEO and Board to
develop and implement the Group’s strategy.

– Provides financial leadership to the Group and aligns the
Group’s business and financial strategy and management
of the Company’s capital structure.

– Responsible for financial planning and analysis, treasury

– Regularly reviews the Group’s organisational structure and

and tax.

COMPANY SECRETARY:
CARMELINA CARFORA
– Secretary to the Board and its Committees.
– Compliance with Board procedures and supporting the

Chairman.

– Makes sure the Board has high-quality information,

adequate time and the appropriate resources.

– Considers Board effectiveness in conjunction with

the Chair.

– Facilitates the Directors’ induction programmes

recommends changes as appropriate.

– Leads and monitors the effectiveness of the key finance

and assists with professional development.

– Sets overall policies for recruitment, management, staff

functions and appropriate development of the finance team.

– Provides advice, services and support to all Directors

development and succession planning and provides updates
to the Remuneration Committee.

– Oversight of employee initiatives, diversity and inclusion,

and employee wellbeing.

– Together with the Chairman and CFO, represents the

Company to its customers, suppliers, shareholders and
other stakeholders.

– Leads on the Group’s ESG strategy and the net zero

carbon pathway.

– Corporate communications and the IR strategy.

– Responsible for the IT function and co-ordinates and

as and when required.

delivers IT projects to support the growth and strategic
priorities of the Group.

– Responsible for organising the Annual General Meeting.

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DIVISION OF RESPONSIBILITIES CONTINUED

Our governance framework

Board of Directors

The role of the Board is to promote the long-term success of Workspace by setting a clear purpose and the Group’s strategy for delivering the
long-term value to our shareholders and other stakeholders. It sets the governance and values of the Group and has ultimate responsibility for
its management, direction and performance. The effective working relationship between the Board and the Executive Committee facilitates both
support and challenge where required, with Board awareness enhanced through regular dialogue, including reporting from key individuals and the
provision of minutes from all Board Committee and Executive Committee meetings.

THE BOARD DELEGATES CERTAIN MATTERS TO ITS FOUR PRINCIPAL COMMITTEES

Nominations Committee

Audit Committee

Risk Committee

Remuneration Committee

CHAIRED BY
Stephen
Hubbard

MEMBERSHIP
Seven Independent
Non-Executive
Directors

KEY RESPONSIBILITIES:
– Reviews succession plans for the Board
and its Committees and considers its
structure, size, composition and diversity.
– Supports the development of an inclusive
and diverse talent pipeline, and reviews
supporting initiatives to increase diversity.

– Monitors that the Board has the

appropriate knowledge, skills and
experience to operate effectively and
deliver our strategy.

– Recommends to the Board the

appointment of a Non-Executive Director
for employee engagement.

Nominations Committee –
pages 136 to 148

CHAIRED BY
Chris Girling

MEMBERSHIP
Six Independent
Non-Executive
Directors

CHAIRED BY
Damon Russell

MEMBERSHIP
Four Independent
Non-Executive
Directors

KEY RESPONSIBILITIES:
– Oversees the Group’s financial reporting.
– Maintains and manages the relationship

KEY RESPONSIBILITIES:
– Oversees the risk management

framework.

with the External Auditor, including
monitoring their performance and
reappointment.

– Oversees all risks except financial risks

and risks relating to financial IT systems.

– Advises the Board on risk appetite,

CHAIRED BY
Suzi Williams

MEMBERSHIP
Four Independent
Non-Executive
Directors

KEY RESPONSIBILITIES:
– Determines the Remuneration Policy for
Executive Board Directors and considers
whether there is a clear link between
performance and remuneration.

– Reviews workforce remuneration and

– Reviews and monitors financial risks and

tolerance and strategy.

related policies.

risks related to financial IT systems.

– Develops remuneration policies and

practices to support clarity, simplicity,
transparency and alignment with culture.

Audit Committee – pages 149 to 160

Risk Committee – pages 161 to 166

Remuneration Committee –
pages 167 to 197

Executive
Committee

See page 132

Supporting
Committees

KEY RESPONSIBILITIES:
The Executive Committee is responsible for the execution of the
Company’s strategy and the day-to-day management of the business.

Disclosure
Committee

KEY RESPONSIBILITIES:
Identifies and controls inside information or information which could become
inside information and determines how and when that information is
disclosed in accordance with applicable legal and regulatory requirements.

The Executive Committee operates a number of supporting committees
that provide oversight on key business activities and risks.

The Terms of Reference of each Board Committee are available on the Company’s website at
www.workspace.co.uk/investors/about-us/governance/committee-terms-of-reference

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DIVISION OF RESPONSIBILITIES CONTINUED

How we govern

Non-Executive Directors

page 129

Re-election and election of
Directors

Relationship between the Board
and the Executive Committee

Composition of the Executive
Committee

Information flow to the Board

page 130

page 131

page 132

page 134

The Non-Executive Directors
have a broad mix of business
skills, knowledge and
experience acquired across
different business sectors.
This allows them to provide
independent and external
perspectives to Board
discussions.

The Non-Executive Directors
provide constructive
challenge to the Executives,
help to develop proposals
on strategy and monitor
performance.

Independence of Non-
Executive Directors
During the year, the Board
considered the independence
of all the Non-Executive
Directors, save for the
Chairman who was deemed
independent by the Board at
the date of his appointment.
The Board has reconfirmed
that our Non-Executive
Directors remain independent
from executive management
and free from any business or
other relationship which could
materially interfere with the
exercise of their independent
judgement. This is protected
through a number of
mechanisms including:

– Meetings between the
Chairman and the Non-
Executive Directors,
individually and collectively,
without the Executive
Directors present. These are
typically held before each
Board meeting and used to
discuss areas relevant to the
operation of the Board and
the Group in a more private
setting. This year there were
five of these meetings held.

– Separate and clearly
defined roles for the
Chairman, as head of
the Board, and the Chief
Executive Officer, as head
of executive management,
as set out on pages 126
to 127.

The Nominations Committee
oversees the overall
independence of Board
membership and the
continuing independence
of individual Directors,
with the Board deemed
independent in line with the
recommendations of the
Code. Further details of this
supporting evaluation can be
found on page 143.

Graham Clemett is the Senior
Independent Non-Executive
Director and Chairman of the
Audit Committee.

The Board is satisfied
that each of the Non-
Executive Directors can
devote sufficient time to
the Company’s business to
discharge their responsibilities
effectively. They offer
strategic guidance to Board
discussions and independent
decision-making to their
Board and Committee duties
(see the table on page 105 for
Board meeting attendance).

The Nominations Committee
keeps under review the
tenure of all Directors, Board
diversity and the effectiveness
of individual Directors.

The biographies of all of
the members of the Board,
outlining their experience, can
be found on pages 106 to 109.

Time commitment and
external appointments
The expected time
commitment of the Chairman
and Non-Executive Directors
is agreed and set out in
writing in the letter of
appointment to the position,
at which time the existing
external demands on an
individual’s time are assessed
to confirm their capacity to
take on the role. This was a
key consideration this year
in the recommendation to
appoint Rosie Shapland and
Lesley-Ann Nash to the Board.
Further appointments which
could impair the ability to
meet these arrangements can
only be accepted following
approval of the Board.

When assessing additional
directorships, the Board
considers the number of
public directorships held
by the individual already
and their expected time
commitment for those roles
(see biographies on pages 106
to 109). The Board takes into
account guidance published
by institutional investors
and proxy advisers as to the
maximum number of public
appointments which can be
managed efficiently.

Executive Directors may
accept a non-executive role
at another company with the
approval of the Board.

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DIVISION OF RESPONSIBILITIES CONTINUED
HOW WE GOVERN CONTINUED

Non-Executive Directors
continued

CBRE have also confirmed
that Stephen had no
involvement in relation to the
conduct of the valuations
that they carried out, in
the year, on behalf of the
Company. Their appointment
is by the Directors of the
Company, acting through
the Executives, and any
communication is entirely
with them. CBRE have stated
that Stephen had no access to
the data or calculations, was
not involved in the process
and they did not discuss the
valuations with him.

Given the measures stated
above and Stephen’s
retirement from CBRE UK,
the Board is satisfied and
continues to conclude that
Stephen remains independent
both in character and in
judgement, including in
relation to his responsibilities
as Chairman of the Company.

In addition, in July 2020,
Stephen stepped down from
the Audit Committee on his
appointment as Chairman of
the Company.

Stephen Hubbard
As in previous years, the
independence of Stephen
Hubbard was specifically
considered during the year.
Stephen was previously
Chairman of CBRE UK, who
are the Group’s external
independent valuers. Stephen
retired from CBRE UK in
December 2019.

Furthermore, while he
remained as Chairman
of CBRE UK, he had
no involvement in any
discussions or decisions
regarding the appointment
of CBRE or the fees paid to
them.

Re-election and
election of Directors

In accordance with the Code,
all the Directors will submit
themselves for election or
re-election at the AGM on
22 July 2021, except for Maria
Moloney who will be stepping
down from the Board as a
Non-Executive Director and
will not seek re-election.
Following the external Board
evaluation review, detailed
on page 146, and taking into
account the Directors’ skills
and experience (set out on
pages 106 to 109, the Board
believes that the election and
re-election of the Directors
is in the best interests of the
Company.

The explanatory notes in the
Notice of Meeting for the
AGM state the reasons why
the Board believes that the
Directors proposed for re-
election at the AGM should be
reappointed.

Rosie Shapland and Lesley-
Ann Nash will be seeking
election as Directors following
their appointments to the
Board on 6 November
2020 and 1 January 2021,
respectively. Rosie and Lesley-
Ann are each submitting
themselves for election by
shareholders at the AGM in
July 2021 as this will be the
first AGM since they were
appointed as Directors.

The Board is satisfied that
both Rosie and Lesley-
Ann are independent in
accordance with the Code
and that there are no
circumstances which are likely
to impair or could appear to
impair their independence as
a Non-Executive Directors.
The Nominations Committee
of the Group has considered
their commitments and has
concluded that they have
sufficient time to meet their
Board responsibilities.

Rosie will assume the
role of Chair of the Audit
Committee at the conclusion
of the AGM in July 2021. The
Nominations Committee has
recommended that Rosie has
the necessary level of relevant
financial and accounting
experience required by
the provisions of the UK
Corporate Governance Code
to perform this role. Rosie is a
Chartered Accountant and a
former audit partner at PwC
with over 30 years of audit
experience across multiple
sectors. Rosie is also the
Chair of the Audit Committee
for both PayPoint plc and
Foxtons Group plc.

Mr Clemett has a service
contract and details can be
found on page 196.

Mr Benson has a service
contract and details can be
found on page 196.

None of the Non-Executive
Directors have service
contracts and are instead
given letters of appointment.
The appointments of Chris
Girling, Maria Moloney, Damon
Russell, Suzi Williams, Rosie
Shapland and Lesley-Ann
Nash may be terminated by
either the Company or any
one of them giving three
months’ notice in writing.
The appointment of Stephen
Hubbard may be terminated
by either him or the Group
giving six months’ notice
in writing.

The terms and conditions
of appointment of Non-
Executive Directors,
including the expected time
commitment, are available for
inspection at the Company’s
registered office.

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DIVISION OF RESPONSIBILITIES CONTINUED
HOW WE GOVERN CONTINUED

The relationship between the
Board and the Executive Committee

THE BOARD
The Board is responsible for contemplating market
trends and their impact on our strategy, assessing
appropriate levels of risk and setting the objectives for
the business, including the approach to ESG matters. It
delegates the delivery of the strategy to the Executive
Committee.

EXECUTIVE COMMITTEE
The Executive Committee is responsible for managing
the business, day-to-day operational decisions and
delivering the strategy set by the Board.

The Executive Committee is
accountable to the Board for
implementation of the agreed
strategy. The Executive
Committee monitors
customer and market trends,
assesses the implications and
benefits of asset management
initiatives and oversees
the effectiveness of the
governance framework.

The Board delegates all
operational matters to the
Executive Committee except
for the matters reserved for
the Board.

The Board considers there
to be an appropriate balance
between Executive and Non-
Executive Directors required
to lead the business and
safeguard the interests of
shareholders.

As at 31 March 2021, the
Board comprises the
Chairman, six Non-Executive
Directors (all of whom are
independent) and two
Executive Directors. This
meets the requirement of
the Code for at least half
the Board, excluding the
Chairman, to be independent
Non-Executive Directors.

Executive Committee –
managing the business
The Executive Committee,
which is chaired by Graham
Clemett, supports the Board
by providing executive
management of Workspace
within the strategy approved
by the Board.

MATTERS RESERVED FOR THE BOARD
The Board has a formal schedule of matters reserved for its
approval which includes:
– review and approval of the Group’s strategy, business

objectives and annual budgets

– approval of the Group’s dividend policy and the payment and

recommendation of interim and final dividends

– approval of Full Year and Half Year Results, including the

review and approval of the going concern basis of accounting
and the viability assessment

– health and safety performance across the Group
– on the advice of the Nominations Committee, reviewing

succession plans for the Board and senior management team;

– approval of significant funding decisions
– review and approval of corporate transactions
– on the advice of the Risk Committee, the operation and

maintenance of the Group’s systems of risk management,
internal control and corporate governance

– setting the Group’s purpose, values and standards

EXECUTIVE COMMITTEE ACTIVITIES IN 2020/21
– Developed the Group strategy and budget for approval by

the Board.

– Discussed financing proposals such as the issuance of a green

bond in March 2021.

– Approved the next zero carbon pathway strategy.
– Monitoring of operational and financial results against plans

and budgets.

– Considered regulatory developments.
– Reviewed and approved capital expenditure within the

authorities delegated by the Board.

– Collectively responsible for the day-to-day running of the business.
– Developed leadership skills and the future talent of the
business so that strong succession plans are in place as
the Group develops.

– Analysed and reviewed initiatives of particular interest to

the Group and presenting these to the Board as appropriate.
– Focused on the effectiveness of risk management and control

procedures.

– Reviewed, monitored and implemented the operational

response to Covid-19.

– Participated in training programmes such as unconscious

bias training.

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DIVISION OF RESPONSIBILITIES CONTINUED
HOW WE GOVERN CONTINUED

Composition of
the Executive
Committee

The Executive
Committee is
responsible for
managing the
business, day-to-day
operational decisions
and delivering
the strategy set
by the Board.

Graham Clemett
CEO

Graham Clemett
Chief Executive Officer

Dave Benson
Chief Financial Officer

Carmelina Carfora
Company Secretary

Angus Boag
Development Director

For full details of
Graham’s responsibilities
and experience

For full details of
Dave’s responsibilities
and experience

See page 106

See page 107

SPECIFIC RESPONSIBILITIES:
– Company Secretary to the Board
and its Committees. Advises on
legal, corporate governance,
regulatory and compliance;
manages share schemes and
ensures compliance with Board
procedures.

SPECIFIC RESPONSIBILITIES:
– Planning consents;
redevelopment and
refurbishment project
management; building
maintenance; joint ventures;
valuations; sustainability and
environmental strategy.

BACKGROUND AND
RELEVANT EXPERIENCE:
– Carmelina joined the Company

as Company Secretary in
March 2010. She was previously
Company Secretary of
Electrocomponents plc.

BACKGROUND AND
RELEVANT EXPERIENCE:
– Angus joined the Group in June
2007 as Development Director.
He has experience in property
and construction management
and is responsible for adding
value to the Group’s assets
through planning consents,
development and joint
ventures. Angus also manages
all construction across the
portfolio and has responsibility
for the sustainability
programme.

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DIVISION OF RESPONSIBILITIES CONTINUED
HOW WE GOVERN CONTINUED

Composition of the
Executive Committee
continued

John Robson
Asset Management Director

Claire Dracup
Head of People

Will Abbott
Chief Customer Officer

Richard Swayne
Investment Director

SPECIFIC RESPONSIBILITIES:
– Asset management of the

SPECIFIC RESPONSIBILITIES:
– HR; training and staff

portfolio, including lettings,
lease renewals, property
management and management
of the centre and facilities team.

development; internal culture;
business centre support; health
and safety; monitoring of
customer service.

SPECIFIC RESPONSIBILITIES:
– Customer engagement;
marketing and brand
development.

SPECIFIC RESPONSIBILITIES:
– Investment, acquisitions and

disposals.

BACKGROUND AND
RELEVANT EXPERIENCE:
– John joined Workspace in May
2008 as an Asset Manager.
He was promoted to Head of
Asset Management in February
2013 and to Asset Management
Director in October 2017.
Prior to joining Workspace,
John qualified as a chartered
surveyor and worked for
Legal & General Investment
Management, London Merchant
Securities and ING Real Estate.

BACKGROUND AND
RELEVANT EXPERIENCE:
– Claire joined Workspace

BACKGROUND AND
RELEVANT EXPERIENCE:
– Will joined the business on

in 1995, initially as a centre
manager before progressing
to Portfolio Manager. In 2008
Claire became Head of Support
Services and was responsible
for facilities management,
security, health and safety and
business centre support, which
included recruitment, training
and improvements to service
and quality control. Claire was
appointed as Head of People in
April 2020.

20 April 2020, bringing a wide
range of experience from over
20 years in marketing. Having
started his career in advertising,
Will held a number of senior
roles across digital media, FMCG,
financial services and travel
sectors. Prior to Workspace,
Will was Marketing Director
UK & Ireland at Hiscox during a
significant period of growth for
the insurer, and most recently
was Chief Marketing Officer of
Neilson Active Holidays.

BACKGROUND AND
RELEVANT EXPERIENCE:
– Richard joined Workspace
in November 2014 as an
Investment Manager. He
was promoted to Head of
Investment in October 2017
and Investment Director in
April 2020. Prior to joining
Workspace, Richard qualified
as a chartered surveyor
and worked for Cushman &
Wakefield Investors and LFF
Real Estate Partners.

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DIVISION OF RESPONSIBILITIES CONTINUED
HOW WE GOVERN CONTINUED

Information flow to the Board

THE BOARD

Number of Board
meetings in 2020/21

ONE-TO-ONE
MEETINGS
One-to-one meetings
are held between
new Directors and
senior management as
part of the induction
process. The CEO and
CFO meet with senior
management individually
to discuss operations and
performance, after which,
the CEO and/or CFO
will report back to the
Board on matters that
require discussion.

BOARD
PRESENTATIONS
Employees below Board
level are invited to
present to the Board on
operational topics. During
the year our Head of
Sustainability attended
a meeting to provide
an update on our ESG
objectives and progress
against targets. Our Head
of Marketing and Head of
Sales attended to provide
an update on marketing
and sales.

EMPLOYEE
ENGAGEMENT
The Chairman held
several meetings with
staff as part of his role as
Non-Executive Director
responsible for employee
engagement. The
Company also conducted
a staff survey to
understand the challenges
employees were facing
during lockdown. Regular
town hall events kept
employees connected.
The feedback from there
was then presented to
the Board.

The Board utilises an
electronic Board paper
system which provides
immediate and secure
access to Board papers
and materials. Prior to
each Board meeting, the
Directors receive through
this system the agenda and
supporting papers permitting
them to have the latest
and relevant information in
advance of the meeting.

After each Board meeting, the
Company Secretary operates
a comprehensive follow-up
procedure to enable actions
to be completed as agreed by
the Board.

Information and support
to the Board
The Board and its
Committees are provided
with comprehensive papers
in a timely manner to allow
members to be fully briefed
on matters to be discussed at
their meetings.

The Directors have access
to the advice and services
of the Company Secretary,
Carmelina Carfora. Her
biography can be found on
page 132. At the direction
of the Chairman, Carmelina
is responsible for advising
the Board on matters of
corporate governance and
compliance with Board
procedures.

In consultation with the
Chairman, the Chief Executive
Officer and Chief Financial
Officer, the Company
Secretary manages the
provision of information to
the Board for their formal
Board meetings and at other
appropriate times.

The Chief Executive Officer
and the Chief Financial Officer
keep the Board fully aware,
on a timely basis, of business
matters relating to the Group.
They provide various updates
to the Board on many aspects
of the business, ranging
from trading performance,
progress being made on
our refurbishment and
redevelopment projects, the
rationale for acquisitions and
disposals and how these are
aligned to strategy. They
also inform the Board on
the discussions held with
analysts, investors and other
stakeholders.

The Company Secretary
and external advisers
periodically update the
Board on regulatory changes.
These have included the
2018 Corporate Governance
Code and developing
guidance and practice in
data protection, as well as
regulatory developments
relating to Covid-19.

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DIVISION OF RESPONSIBILITIES CONTINUED
HOW WE GOVERN CONTINUED

Information flow
to the Board
continued

How the Board discharges
its responsibilities
The Board discharges its
responsibilities through an
annual programme of Board
and Committee meetings
which are scheduled
throughout the year, with
main meetings timed
around the Group’s financial
calendar. Additional meetings
are convened to consider
an annual cycle of topics,
including the annual strategy
day, key management
and financial updates,
review of risk as well as the
approval of acquisitions and
refurbishment programmes.
In the year ended 31 March
2021 the Board met formally
on nine occasions, including
a strategy day in September
2020. Supplementary
meetings or conference calls
are held between formal
Board meetings as required.

The Board engaged with
the Company’s advisers
during the year and there
was a presentation from
the Company’s brokers in
September and July 2020.
The Group’s valuer, CBRE,
presented to the Audit
Committee meetings in May
2020 and November 2020.
The CBRE presentations
covered the valuation of the
property portfolio and the
wider market in which the
Company operates.

Slaughter and May attended
the Board meeting in March
2021 to give an update to
the Board on climate-related
disclosures, Board diversity
and the Market Abuse
Regulations.

The Directors are expected
to attend all meetings of the
Board, the Committees on
which they serve and the
AGM, and to devote sufficient
time to the Company’s affairs,
to enable them to fulfil their
duties as Directors.

Should the Directors be
unable to attend meetings,
they would be provided
with papers to allow
them to make their views
known to the Chairman
ahead of that meeting.

Prior to each Board meeting,
and periodically, the Chairman
meets the Non-Executive
Directors without the
Executive Directors present,
and maintains regular contact
with the Chief Executive
Officer, Chief Financial Officer
and other members of the
management team.

If any Director has concerns
about the running of the
Company or proposed action
which cannot be resolved,
these concerns are recorded
in the Board minutes. No such
concerns arose during the
year under review.

Despite the unprecedented
conditions we have
experienced over the
preceding months, the
Workspace team has
continued to work closely
during the period of
lockdown. The Board,
who have continued with
their meetings remotely
via the use of technology,
have continued with their
normal cycle of Board
meetings, and remained in
regular communication with
each other and with the
management team.

Training and development
With the ever-changing
environment in which
Workspace operates, it is
important that the Board
maintains a good working
knowledge of the property
industry and how the
Group operates within its
sector, as well as remaining
aware of recent and
upcoming developments
in the wider legal and
regulatory environment.

Directors attend external
seminars and briefings in
areas considered appropriate
for their professional
development. This training is
designed to build upon the
diverse range of experience
that each Director brings to
the Board. The Company
Secretary provides regular
updates on legal, regulatory
and corporate governance
matters. As required, we invite
external professional advisers
to provide training and
updates on their specialist
areas. Updates and training
are not solely reserved for
legislative developments but
aim to cover a range of issues
including, but not limited to,
market trends, the economic
and political environment,
ESG, technology and social
considerations.

Our Directors are invited
to identify areas in which
they would like additional
information or training,
following which the Company
Secretary will arrange for
the necessary resources to
be put in place. The resulting
sessions may be internally or
externally facilitated.

This year the Directors
have received updates and
presentations on the following
areas:
– The legal duties of a

Director (and Section 172
considerations)

– ESG commitments and net

zero carbon pathway

– Compliance with the 2018
UK Corporate Governance
Code

– Data protection compliance
– Executive remuneration
trends and best practice
– The Company’s purpose
and how it aligns with
culture and values
– Inclusion and diversity
– Market Abuse Regulation
– Conflicts of interest

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COMPOSITION, SUCCESSION AND EVALUATION

Contents

Stephen Hubbard
Chairman

An effective Board requires
the right mix of skills and
experience. Our Board is a
diverse and effective team
focused on promoting the
long-term success of the
Group for the benefit of
all stakeholders.

Overview

Complying with the Code Principles

Chairman’s letter

page 137

page 138

The role of the Nominations Committee

page 139

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COMPOSITION, SUCCESSION AND EVALUATION CONTINUED

Overview

Complying with the Code Principles

Attendance at
Nominations
Committee meetings

Committee membership
The Committee comprises the Non-Executive
Directors and is chaired by Stephen Hubbard.
Details of individual attendance at the
meetings held during the year are set out
below. More information on the skills and
experience of all Committee members can
be found on pages 106 to 109.

Stephen Hubbard (Chairman)

Maria Moloney

Suzi Williams

Chris Girling

Damon Russell

Rosie Shapland1

Lesley-Ann Nash2

Meetings
attended

3/3

–

1. Rosie Shapland was appointed as a Non-Executive Director

on 6 November 2020.

2. Lesley-Ann Nash was appointed as a Non-Executive

Director on 1 January 2021.

PRINCIPLE J
Appointments to the board should
be subject to a formal, rigorous and
transparent procedure, and an effective
succession plan should be maintained
by board and senior management. Both
appointments and succession plans
should be based on merit and objective
criteria and, within this context, should
promote diversity of gender, social
and ethnic backgrounds, cognitive and
personal strengths.

Having reviewed the succession plans for
the Board, the Nominations Committee
has, during the year, appointed two Non-
Executive Directors to the Board. An
external search consultancy was used to
facilitate the appointments and provide
access to a strong and diverse candidate
pool. The Committee also plays a key
role in supporting inclusion and diversity
at Workspace.

PRINCIPLE K
Board and its committees should have
a combination of skills, experience and
knowledge. Consideration should be
given to the length of service of the
board as a whole and membership
regularly refreshed.

PRINCIPLE L
Annual evaluation of the board
should consider its composition,
diversity and how effectively
members work together to achieve
objectives. Individual evaluation should
demonstrate whether each director
continues to contribute effectively.

Throughout the reporting period, the
Nominations Committee continued
to focus on the succession pipeline
for the Board, including the tenure of
all Directors.

As part of the three-year external
Board evaluation cycle, this year the
Board and Committee evaluation
process was externally facilitated. The
review was forward-looking, evaluating
the effectiveness of the Board and
its Committees by looking at their
composition, dynamics and processes,
and providing recommendations to
increase effectiveness in the future.

See page 140

See page 143

See page 146

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Annual Report and Accounts 2021

Contents

COMPOSITION, SUCCESSION AND EVALUATION CONTINUED

Nominations
Committee
Chairman’s
Letter

2 June 2021

Diversity and inclusion
The Board fully recognises the importance of diversity in all forms on
the Board and across the organisation. We are committed to diversity
and recognise the benefits that a diverse and inclusive workforce can
bring, with differences in background, personal characteristics, skills,
industry experience and other qualities combining to provide different
perspectives. These have a positive impact on boardroom debate and
wider organisational effectiveness.

The purpose of this report is to highlight the role that the Nominations
Committee plays in monitoring the Board’s balance of skills, experience,
knowledge and background to provide the breadth, diversity of thinking
and perspective needed to provide effective leadership.

At Board level, the Nominations Committee and the Board are
committed to making sure that, together, the Directors possess a mix of
skills, experience, diversity and perspectives to support the long-term
success of the Group as well as reflecting our culture and purpose.

Non-Executive Director succession
As Chairman of both the Committee and the Company, I am acutely
aware of the need to ensure that there are no gaps in the skills or
experience as members of the Board reach the end of their terms.

This year, the Committee continued its focus on succession planning.
In doing so, it considered the tenure, mix and diversity of skills and
experience of existing Board members and those required of prospective
Board members in the context of the Group’s medium and long-term
strategy.

Chris Girling, who is both Chairman of the Audit Committee and
Senior Independent Director, and Damon Russell, Chairman of the Risk
Committee, will both reach their nine-year terms in 2022. Our focus
this year has been on finding a Non-Executive Director with recent
and relevant financial experience to succeed Chris as Chairman of the
Audit Committee in July 2021. We are pleased that Rosie Shapland,
a Chartered Accountant and former audit partner at PwC, joined the
Board in November 2020.

We also welcomed Lesley-Ann Nash following our search for a new
Non-Executive Director. Lesley-Ann, who joined the Board in January
2021, brings a broad range of experience acquired during her time in the
Cabinet Office of HM Government and, previously, as Managing Director
of Morgan Stanley.

We are encouraged by our progress. We are pleased with, but not
complacent regarding, our gender and ethnic representation at Board
level and across the Group. In particular, we are pleased to report that
we meet the recommendations of the Hampton-Alexander and Parker
Reviews. On the retirement of Maria Moloney in July 2021, 37% of our
Board will be female and, of our Executive Committee and their direct
reports, 25% and 46% respectively are female.

On page 145 we describe our diversity and inclusion policy in further
detail. We recognise the importance of diversity to our employees
and customers. The benefits of diversity in its widest sense, including
gender and ethnic diversity, have been and will continue to be an active
consideration whenever changes to the composition of the Board or our
senior management team are contemplated.

Looking forward, the Nominations Committee will continue to develop
and monitor succession plans both at the Board and senior management
level, in line with our desire to make sure that the Board and Workspace
employees are representative of the diverse society in which we live. The
remainder of this report provides further information on the key activities
of the Committee during the year.

The dedicated search process for both Rosie and Lesley-Ann is set out
on pages 140 to 141.

Stephen Hubbard
Chairman of the Nominations Committee

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COMPOSITION, SUCCESSION AND EVALUATION CONTINUED

The role of the Nominations Committee

The Nominations Committee is
responsible for monitoring that
the Board, its Committees and
Workspace’s senior management
have a good balance of skills,
knowledge and experience, to
lead Workspace effectively both
now and in the longer term.

This is achieved through succession planning
and talent development, and an understanding
of the changing competencies required
to support the Group’s strategy, purpose,
vision, culture and values. The way in which
this is supported through the current Board
composition is set out on page 143.

The Committee also plays a key role in
supporting inclusion and diversity at
Workspace, which at Board level involves
reviewing and monitoring processes and
initiatives in the Group, with employee
engagement playing an important role.

The Committee is also responsible for
recommending candidates for the role of
Non-Executive Director responsible for
employee engagement.

How the Committee operates
The Committee held three meetings, primarily
to progress the appointment of our new
Non-Executive Directors.

– The meetings are usually held immediately

prior to or following a Board meeting,
though the Committee also meets on other
occasions on an ad hoc basis, as required.

– Only members of the Committee have

the right to attend meetings. However, an
invitation to attend meetings is, on occasion,
extended to the Chief Executive Officer, in
order that the Committee can understand
his views, particularly on key talent within the
business.

– The Directors can, for the purpose of

discharging their duties, obtain independent
professional advice at the Company’s
expense. No Director had reason to use this
facility during the year.

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Contents

COMPOSITION, SUCCESSION AND EVALUATION CONTINUED

Nominations
Committee
activities
in 2020/21

Board succession and
appointment of new
Non-Executive Directors

Performance of the
Nominations Committee

Board composition

Inclusion and diversity policy

Board evaluation

page 140

page 143

page 145

page 146

Board succession and appointment
of new Non-Executive Directors

During the year, the Committee continued to
fulfil its core responsibilities of reviewing the
structure of the Board and its Committees,
recommending new Board appointments
and adhering to a formal appointment and
induction process.

Chris Girling will have served nine years as a
Non-Executive Director in February 2022 and
will step down as Audit Committee Chairman
following the conclusion of the AGM in July
2021. Considering Chris’s length of tenure, our
focus was on finding the right person who
could eventually assume the role of Chair of
the Audit Committee.

Key considerations for the search process
The Nominations Committee discussed the
role specification in detail and concluded that
strong financial skills, with significant and
relevant financial experience, were essential for
this role. Potential areas to inform the search
process were agreed, to include:
– a qualified accountant, with a deep

understanding of the parameters of a non-
executive role

– an ability to constructively challenge and
support the senior management team
and the Board while maintaining a highly
collaborative approach and collegiate style
– a strong interest in ESG and how it is shaping
the work of the Board and the impacts on
the business

In addition, a key consideration as to an
individual’s suitability for the role was that
candidates would be able to devote sufficient
time to the role.

Our extensive search and selection process
Fidelio Partners Board Development
& Executive Search Ltd (‘Fidelio’), an
independent external consultancy, were
engaged to conduct the selection process.

Fidelio were asked to draw up a detailed
role specification. This was reviewed with
the Chairman who then engaged with
the Nominations Committee. A final role
specification was then approved.

The Nominations Committee then agreed that
the Chairman would conduct interviews with
five of the candidates presented.

Following these interviews, the Chairman and
Fidelio compiled a shortlist of two candidates
based on their level of experience, commercial
focus and broad financial skill sets.

The two candidates then met with Chris Girling,
Senior Independent Director and Chairman of
the Audit Committee, Graham Clemett (Chief
Executive Officer) and Dave Benson (Chief
Financial Officer).

Considered candidates with relevant
and diverse skills
In follow-up discussions held between the
Chairman and the Committee, they reflected
upon the experience of the candidates and
their specific skill sets.

After due consideration, the Committee
recommended the appointment of Rosie
Shapland to the Board with effect from
6 November 2020. The Nominations
Committee was satisfied that, as a Chartered
Accountant and as a former audit partner at
PwC, with over 30 years of audit experience
across multiple sectors, Rosie has the relevant
skills to assume the role of Chair of the Audit
Committee.

Furthermore, given the experience and diverse
skills of Lesley-Ann Nash, acquired during her
tenure as a Director in the Cabinet Office of
HM Government and, previously, as Managing
Director at Morgan Stanley, it was agreed that
Lesley-Ann also be invited to join the Board
as a Non-Executive Director with effect from
1 January 2021.

This followed confirmation of the time
commitment required and a review of existing
arrangements for any actual or potential
conflicts of interest.

The biographies for Rosie and Lesley-Ann can
be found on pages 108 and 109.

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COMPOSITION, SUCCESSION AND EVALUATION CONTINUED
NOMINATIONS COMMITTEE ACTIVITIES IN 2020/21 CONTINUED

Board succession and
appointment of new
Non-Executive Directors
continued

External search consultancy engaged by the
Nominations Committee
Fidelio are signatories to the Voluntary
Code of Conduct for executive search firms
and are committed to identifying the most
qualified and inclusive candidates for the roles
identified. Fidelio was recently accredited by
the Hampton-Alexander Review for the fourth
year running for their contribution towards
achieving gender balance on Boards and
leadership teams in the category ‘Beyond
FTSE 350’. Fidelio also has a strong track
record with regard to ethnic diversity in its
Board search practice.

The Board development team of Fidelio were
engaged to undertake an external Board
evaluation, which was concluded in April 2021.
Details of the external evaluation can be found
on page 146. Fidelio have no other connection
with the Company or the individual Directors.

Rosie Shapland and
Lesley-Ann Nash
photographed at
Kennington Park.

Induction of Rosie Shapland
and Lesley-Ann Nash

The inductions for both Rosie
and Lesley-Ann began shortly
after the announcement
of their appointment on
6 November 2020. Given
the restrictions imposed by
Covid-19, meetings with staff
and external advisers were
held remotely. Details of the
induction programme can be
found on page 142.

All new Non-Executive and
Executive Directors joining
the Board undertake a formal
and personalised induction
programme which is designed
to provide an understanding
of the Company’s business,
governance, management
and its stakeholders. This
covers, for example, the
operation and activities of the
Company including site visits
and meeting members of the
senior management team, the
Company’s principal strategic
risks, the role of the Board,
the decision-making matters
reserved to the Board, and
the responsibilities of the
Board Committees.

“ Workspace’s tailored

“ I joined Workspace in

director induction
programme provided an
excellent opportunity to
meet with members of
the Board and Executive
Committee. It enabled me
to learn more about the
business and to discuss
Board strategy, priorities
and future plans.”

Rosie Shapland
Non-Executive Director

January 2021 and received
an extensive and very
informative induction. Now
that Covid-19 restrictions
are easing, I am very much
looking forward to spending
more time in our business
centres and at head office.”

Lesley-Ann Nash
Non-Executive Director

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COMPOSITION, SUCCESSION AND EVALUATION CONTINUED
NOMINATIONS COMMITTEE ACTIVITIES IN 2020/21 CONTINUED

Board succession and appointment of new Non-Executive Directors continued

Tailored induction for new Directors
The Company Secretary assists the Chairman
in designing and facilitating an induction
programme for new Directors and their
ongoing training.

Each newly appointed Director receives
a comprehensive induction programme
designed to give them a thorough overview
and understanding of the business, covering
the Company’s purpose, values, strategy, key
business areas and operations, and corporate
governance structure. This is tailored to take
into account a Director’s previous experience
and responsibilities.

Directors are also briefed on their roles
and responsibilities as a director of a listed
company. For Non-Executive Directors,
specific committee responsibilities relevant to
their Committee membership are covered, to
enable them to function effectively as quickly
as possible.

Directors are also offered follow-up sessions in
any areas in which they want to increase their
knowledge, or if they feel they could support
management with their experience.

Rosie Shapland and Lesley-Ann Nash’s
induction programme

For the new Non-Executive Directors, Rosie
Shapland and Lesley-Ann Nash, the induction
programme included the following elements:

– One-to-one meetings with both Executive
Directors, the Chairman and each of the
Non-Executive Directors.

– Briefing from the Chief Executive Officer

on the Group strategy, operational matters
and people.

– Discussion with the Chief Financial

Officer on financial matters, the control
environment, including the capital
structure and funding.

– Briefings from the Company Secretary and
the Head of Corporate Communications on
legal governance matters and shareholder
relationships, which were followed up by
sessions with the Company brokers and
external advisers.

– Briefings from senior executives and

managers across our key business areas
and operations, including marketing,
asset management, investment, brand
development, ESG and technology.

– Access to reference materials, including

key information on our governance
framework, recent financial data, investor
relations and policies supporting our
business practices, including our share
dealing policies, conflicts of interest
procedure and directors’ duties.

Regrettably, given the Covid-19 pandemic,
these sessions were held remotely and
on-site visits were not possible. However,
as soon as restrictions ease, visits to our
properties and other direct engagement with
advisers and staff will be arranged.

Time commitments
The Directors have demonstrated a strong
commitment to their roles on our Board and
Committees in a year where all companies
have asked more of their directors to meet the
challenges of Covid-19. The Directors attended
meetings of the Board and Committees
scheduled in 2020/21 as well as additional ad
hoc meetings. For further details of attendance
at meetings see page 105.

The Directors have also given careful
consideration to their external time
commitments to confirm that they are able to
devote an appropriate amount of time to their
roles on our Board and Committees. For each
of the Directors, the Board considers that the
time commitment that he or she is required to
devote to those roles does not compromise
their roles at Workspace. The Nominations
Committee reviews on an ongoing basis
Directors’ time commitments and confirmed
that they were fully satisfied with the amount
of time each Director devoted to the business.

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COMPOSITION, SUCCESSION AND EVALUATION CONTINUED
NOMINATIONS COMMITTEE ACTIVITIES IN 2020/21 CONTINUED

Performance of
the Nominations
Committee

Board composition

BOARD SKILLS AND EXPERIENCE
As at 31 March 2021

Performance of the
Nominations Committee
The performance of the Committee was
considered through the annual Board
evaluation process, which this year was
the subject of an external review.

From the responses provided, it was
concluded that the Nominations
Committee was operating effectively.

Property and real estate
Financial acumen
Brand and marketing
Executive and strategic leadership
ESG

Investor relations and engagement

BOARD TENURE
As at 1 April 2021

0–5 years
5–7 years
7+ years

7
6
3
9
9
5

4
1
4

Reviewing the Board and Committee
composition
As part of the Board’s annual effectiveness
review, described on page 146, the Committee
considers the composition of the Board and
its Committees in terms of balance of skills,
experience, length of service and wider
diversity considerations.

The Board and its Committees continue to
have a strong mix of experienced individuals
on the Board who are not only able to offer an
external perspective on the business, but also
provide constructive challenge to review the
Group’s strategy.

The Board has carefully considered the
guidance criteria regarding the composition
of the Board under the UK Corporate
Governance Code. In the opinion of the Board,
the Chairman and all the Non-Executive
Directors bring independence of judgement
and character, a wealth of experience and
knowledge and the appropriate balance of
skills. The Directors are given sufficient time
to enable them to carry out effectively their
responsibilities and duties to the Board and the
Committees on which they sit.

They are sufficiently independent of
management and are free from any other
circumstances or relationships that could
interfere with the exercise of their judgement.

As at 31 March 2021, the Board comprised the
Chairman, two Executive Directors and six
Non-Executive Directors. Further details on the
independence of Directors and their election

and re-election can be found on page 199 and
on page 4 of the 2021 Notice of Annual General
Meeting.

In accordance with the Code, with the
exception of Maria Moloney, all the Directors
will retire and offer themselves for election
or re-election by shareholders at the 2021
Annual General Meeting. The biographies
of all members of the Board, outlining the
experience they bring to their roles, are set out
on pages 106 to 109.

Non-Executive Directors
Each of Chris Girling, Damon Russell, Maria
Moloney and Stephen Hubbard have or will
have been on the Board for more than six
years, so the Committee has undertaken a
review of their contribution to the Board. The
Committee concluded that each of Chris,
Damon, Maria and Stephen are independent
and continue to bring a range of relevant skills
gained in diverse business environments. This
enables the Directors to bring the benefit of
varying perspectives to Board debate.

The Committee recommended to the Board
the re-election and election of all Directors
with the exception of Maria Moloney who,
having served as a Non-Executive Director for
nine years in May 2021, will retire following the
conclusion of the 2021 AGM.

The skills and experience of the Directors are
summarised on pages 106 to 109.

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COMPOSITION, SUCCESSION AND EVALUATION CONTINUED
NOMINATIONS COMMITTEE ACTIVITIES IN 2020/21 CONTINUED

Board composition continued

Non-Executive Director for
employee engagement
Stephen Hubbard was
appointed as the Non-
Executive Director for
employee engagement in July
2020. Further details can be
found on page 118.

Non-Executive appointments
and time commitments
Following a review process,
the Nominations Committee
concluded that each of the
Directors continued to make
an effective contribution
to the Board and to fulfil
their duty to promote the
success of the Company.
It also considered the time
commitments of the Non-
Executive Directors and
concluded that each Director
is able to dedicate sufficient
time to the Company.

Furthermore, the respective
skills of the Directors were
found to complement one
another, enhancing the overall
operation of the Board.

NON-EXECUTIVE DIRECTORS’ TENURE AS AT 31 MARCH 2021

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

NON-EXECUTIVE CHAIRMAN

Stephen Hubbard

SENIOR INDEPENDENT DIRECTOR

Chris Girling

NON-EXECUTIVE DIRECTORS

Maria Moloney

Damon Russell

Lesley-Ann Nash1

Rosie Shapland1

Suzi Williams

Appointment date
Length of current tenure
Estimated remaining tenure

1. Rosie Shapland and Lesley-Ann Nash were appointed to the Board with effect from 6 November 2020 and 1 January 2021 respectively.

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COMPOSITION, SUCCESSION AND EVALUATION CONTINUED
NOMINATIONS COMMITTEE ACTIVITIES IN 2020/21 CONTINUED

Inclusion and diversity policy

GENDER DIVERSITY
OF THE BOARD
As at 1 April 2021

Male
Female

56%
44%

GENDER DIVERSITY OF
EXECUTIVE COMMITTEE
AND DIRECT REPORTS

Male
Female

58%
42%

Diversity is an integral part of our corporate
culture and our purpose, to give businesses the
freedom to grow. We invest in our employees
through training and support them to grow
and develop the ability to think differently and
act on their own initiative to deliver the best for
our customers. A diverse workforce that brings
an appropriate balance of skills, experience
and knowledge, as well as fresh perspectives,
enriches our business and contributes to our
long-term success.

We believe in fairness and equality of
opportunity where talented people can thrive,
without regard to gender, race, ethnicity,
age, religious beliefs, disability, education
or social background. We operate an Equal
Opportunities Policy which provides that
recruitment and selection, training and
development, and performance reviews
and promotion must all be based solely
on individual merit and free from bias. We
monitor and analyse employee gender and
ethnicity information and we actively follow
recommendations for improving diversity. We
consider this to be consistent with our policy
that selection should be based on the best
person for the role. Active consideration is
always given to using recruitment processes,
including advertisements and use of
recruitment agencies, which allow a diverse
group of potential candidates to be identified
both at Board and employee level.

The Board’s gender and ethnicity balance is in
accordance with the recommendations of the
Hampton-Alexander and Parker Reviews.

To support the development of an inclusive
and diverse talent pipeline, our Human
Resources team has been tasked with
delivering a number of supporting initiatives
to increase diversity and build a pipeline of
talented employees and senior managers.
The HR team has continued to work closely
with employees to identify and progress these
initiatives including:
– supporting employees returning from

parental leave by offering flexible working
options and staggered returns to work
– organising unconscious bias training and

interview skills training for members of the
Executive Committee and staff involved in
recruitment and performance appraisals
– issuing a recruitment policy and guidance

notes to promote fair and thorough
processes

– requesting that CVs from recruiters are
anonymised so that we fairly shortlist
candidates without considering their gender
or ethnicity

– continuing to promote progressive career

development through job rotation to
broaden experiences and skills

– identifying, via our bi-annual appraisal
process, employees who have strong
potential for development at Workspace,
and putting training and development plans
in place for them

– sponsoring external learning and

development as well as providing a
group-wide internal training programme
to offer employees opportunities to learn
and develop skills such as organisation,
people management and managing
difficult situations

Details of the
Board of Directors

– continuing to advertise new job vacancies

See page 106

internally to encourage internal applications

– reviewing and auditing job descriptions

and person specifications to confirm that
inclusive language is being used consistently
and working with recruitment agencies to
make sure the same applies to any materials
produced by them

– requiring, wherever possible, candidate
shortlists for executive-level positions to
include an equal number of men and women

Further details of gender
and ethnic diversity of all
employees

See page 47

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COMPOSITION, SUCCESSION AND EVALUATION CONTINUED
NOMINATIONS COMMITTEE ACTIVITIES IN 2020/21 CONTINUED

Board evaluation

The annual Board and Committee
effectiveness reviews, whether internal
or external, continue to provide a
valuable opportunity for the Board to
reflect on how it operates, enabling it
to improve its effectiveness and that of
its Committees. As part of our three-
year external Board evaluation cycle,
this year, our Board and Committee
evaluation process was externally
facilitated by Gillian Karran-Cumberlege
of Fidelio. Two potential options for
external evaluators were presented
to the Board. In considering who to
appoint, the Board was keen to work
with Fidelio given their extensive Board
evaluation and development experience,
their focus on enhancing effectiveness
and the Board’s contribution to value,
and their understanding of diversity,
ESG and shareholder engagement.
Fidelio were an active contributor to
the recent BEIS consultation paper on
Board Evaluation conducted by the UK
Chartered Governance Institute.

The Executive search team of Fidelio
were, in 2020, engaged to assist with the
search and identification of a new Non-
Executive Director.

They have no other connection with the
Company or the individual Directors.

BOARD EVALUATION TIMELINE

JANUARY 2021
SELECTION OF THE
EXTERNAL EVALUATOR

FEBRUARY-MARCH 2021
INTERVIEWS WITH DIRECTORS,
THE COMPANY SECRETARY
AND MEMBERS OF THE
EXECUTIVE COMMITTEE

APRIL 2021
FINDINGS PRESENTED TO THE
BOARD AND IMPLEMENTATION
PLAN AGREED

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COMPOSITION, SUCCESSION AND EVALUATION CONTINUED
NOMINATIONS COMMITTEE ACTIVITIES IN 2020/21 CONTINUED

Board evaluation continued

BOARD EVALUATION PROCESS

As part of the review, Gillian Karran-Cumberlege of Fidelio:

Met with the Chairman and the Company Secretary to define
the scope and objectives of the evaluation.

Held in-depth one-to-one interviews with each Board
Director and the Company Secretary covering key aspects of
governance and effectiveness.

Held discussions with each of the Executive Committee
members. Given that the purpose of the evaluation is to
increase Board effectiveness, the perspective of the Executive
Committee was considered important.

Conducted a benchmarking of Workspace against three peer
companies, reviewing governance, Board composition, Board
structures, diversity and inclusion, and the approach to ESG.

In addition to the evaluation of the Board and each of the
Committees, individual feedback on the Directors was
provided to the Chairman, who after consideration of the
recommendations from the Board evaluation process, met with
the Directors individually. Feedback on the Chairman was also
provided in the report.

The review was focused on the following key areas:

Board dynamic and decision making.

The value that the Board brings to Workspace.

Board accountability and directors’ duties.

Risk and oversight.

Board leadership and company purpose – including culture
and its alignment to purpose, values and strategy and setting
the tone from the top.

Strategy and the Board’s contribution to its formulation.

Composition, succession and evaluation – including the
appointments process for Board and senior roles, induction
and development of Board members.

Effectiveness of the respective Board Committees in
contributing to the work of the Board.

Engagement with shareholders and other stakeholders.

How ESG considerations are fully integrated into the strategy,
business model and the work of the Board.

The effectiveness of the Board in its oversight of diversity and
inclusion.

The report of the findings was presented to the Board at their
April meeting. The Board discussed the points raised by the
review as well as the recommendations for increasing the
effectiveness of the Workspace Board.

OUTCOMES
The feedback from this year’s external Board evaluation was
positive and concluded that the Board and its Committees
continued to work well. In particular, it was noted that the Board
had moved rapidly to a new form of remote working during the
pandemic, with key decisions and approvals being achieved.

Specific development themes included:
– Create a clear framework for how the Board members and the
Executives can engage beyond the formal Board meetings.

– Continue to develop the Board’s oversight of the broader people
agenda, including diversity and inclusion, succession planning,
culture, and people leadership and development.
– Continue to develop its oversight of strategy and its

implementation.

– Continue to focus on ESG and how it is embedded into strategy.
– Maintain a focus on stakeholder and shareholder engagement.
– Maintain a focus on succession planning and composition of the

Board, its Committees and of the Executive Committee.

– Review the approach to Board learning, developing a dynamic
programme of relevant subject areas that reflect strategic
priorities or challenges.

Following the recommendations from the external review, an
implementation plan and progress tracker were developed
by Gillian Karran-Cumberlege and the Company Secretary
and reviewed by the Board. Progress on implementing the
recommendations will also be reviewed with the Chairman
after six and twelve months.

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COMPOSITION, SUCCESSION AND EVALUATION CONTINUED
NOMINATIONS COMMITTEE ACTIVITIES IN 2020/21 CONTINUED

Board evaluation continued

Progress against the internal Board
effectiveness review conducted
in 2020
In 2019/20, the performance and
effectiveness of the Board was reviewed
through an internally facilitated
evaluation process. The feedback from
this review was positive and concluded
that the Board and its Committees
continued to work well and that the
Directors contribute effectively and
demonstrate commitment to their roles.

Whilst no specific development
themes were identified from the 2020
evaluation, the Board agreed that it
would continue to look for opportunities
to improve its effectiveness. The items
that were discussed during this review
focused on succession planning, the
continued evolution of the Board and
its composition, broader stakeholder
engagement and continued focus
on strategy. These areas have been
progressed within the period.

ITEM DISCUSSED BY THE BOARD:

OUTCOME:

SUCCESSION PLANNING
AND CONTINUED
EVOLUTION OF THE
BOARD AND ITS
COMPOSITION

STRATEGY SHOULD
CONTINUE TO FEATURE
ON THE BOARD’S AGENDA

SHAREHOLDER
COMMUNICATIONS AND
BROADER STAKEHOLDER
ENGAGEMENT ACTIVITY

We are pleased with our progress this year. We appointed Rosie Shapland
and Lesley-Ann Nash as Non-Executive Directors.

Maria Moloney will have served as a Non-Executive Director for nine years
in May, and so will be stepping down at the AGM in July 2021. Until January
2021, Maria was also Chairman of the Remuneration Committee. As part of
the review of succession planning and Board composition, Suzi Williams,
appointed in January 2020, was appointed as Chair of the Remuneration
Committee with effect from January 2021.

More information on the
recruitment and induction
of Rosie Shapland and
Lesley-Ann Nash

Pages 140 to 142

Strategy has remained a key feature on Board agendas in the year,
with a separate strategy day held in September 2020.

More information
on our strategy day

The Board recognises the importance of clear communications
and proactive engagement with all our stakeholders.

More information on our
stakeholder engagement activity

During the year, Stephen Hubbard, the Non-Executive Director responsible
for employee engagement, held meetings with small groups of employees
where a broad range of matters were discussed.

More information on our
employee engagement activity

Pages 116 to 121

Page 111

The Board also received an update from the Chief Executive Officer and
Chief Financial Officer following feedback from investors on the launch of
the Company’s first green bond issuance in March 2021 and, earlier in the
year, from analysts and investors on the full-year and half-year results.

The Chief Executive Officer and other members of the Executive Team
have held remote meetings with staff during lockdown periods, with
regular updates made to the Board on feedback received from staff.

Pages 118

More information on our
stakeholder engagement activity

Pages 116 to 121

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AUDIT, RISK AND INTERNAL CONTROL

Contents

SECTION CONTENTS

The Audit and Risk
Committees fulfil
a vital role in the
Group’s governance
framework, providing
valuable independent
challenge and oversight.

COMPLYING WITH THE CODE

Complying with the Code
Principles

page 150

AUDIT COMMITTEE REPORT

Chairman’s letter

Role of the Audit Committee

Key matters considered

External audit

Significant audit matters

Developing a robust Viability
Statement

page 152

page 154

page 156

page 157

page 159

page 160

RISK COMMITTEE REPORT

Chairman’s letter

Role of the Risk Committee

Key matters considered

page 162

page 163

page 165

Our risk management framework

page 166

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AUDIT, RISK AND INTERNAL CONTROL CONTINUED

Overview

Complying with the Code Principles

PRINCIPLE M
The board should establish formal and
transparent policies and procedures
to ensure the independence and
effectiveness of internal and external
audit functions and satisfy itself on
the integrity of financial and narrative
statements.

In addition to the annual review of
effectiveness, the Committee considered
the independence and objectivity of the
External Auditor through a combination
of assurances provided by the External
Auditor on the safeguards in place
to maintain independence, oversight
of the Non-Audit Services Policy and
fees paid. KPMG confirmed that their
staff complied with their ethics and
independence policies and procedures.

The Group does not currently have
an internal audit function, a matter
which is reviewed annually by the
Audit Committee.

PRINCIPLE N
The board should present a fair,
balanced and understandable
assessment of the company’s position
and prospects.

The Board as a whole is responsible for
determining whether the 2021 Annual
Report and financial statements are fair,
balanced and understandable. The Audit
Committee’s role in this is covered on
page 158. For the year ended 31 March
2021, the Committee confirmed to the
Board that it was satisfied that the
Annual Report was fair, balanced and
understandable.

PRINCIPLE O
The board should establish procedures
to manage risk, oversee the internal
control framework, and determine
the nature and extent of the principal
risks the company is willing to take in
order to achieve its long-term strategic
objectives.

During the year, the Board established a
Risk Committee to oversee the Group’s
risk management. See more detail on
page 163.

Principal risks have been considered in
detail by the Board, the Risk Committee
and the Executive Committee. More
detail can be found on pages 63 to 70.

Read about our risk management and
internal control framework on pages 161
to 166.

See page 158

See page 161

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Chairman of the Audit Committee

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AUDIT, RISK AND INTERNAL CONTROL CONTINUED

Audit Committee Report

Our priority is to
safeguard the integrity
and effectiveness of
our financial reporting
and audit process.

Attendance at Audit
Committee meetings

Chris Girling – Chairman

Maria Moloney

Lesley-Ann Nash

Damon Russell

Rosie Shapland

Suzi Williams

Member
since

Meetings
attended

2013

2012

2021

2013

2020

3/3

1/1

3/3

1/1

3/3

Notes:
In accordance with the UK Corporate Governance Code 2018,
the Board considers that Chris Girling has significant recent
and relevant financial experience.

Stephen Hubbard was appointed Company Chairman in July
2020. In compliance with the Code, Stephen stepped down
as a member of the Audit Committee. Stephen attended all
scheduled meetings of the Audit Committee prior to this date.

Lesley-Ann Nash and Rosie Shapland joined the Board with
effect from January 2021 and November 2020, respectively.

Ishbel Macpherson stepped down as a Non-Executive
Director of the Company on 24 July 2020. As a member of the
Audit Committee, Ishbel attended all meetings held prior to
her departure.

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AUDIT, RISK AND INTERNAL CONTROL CONTINUED
AUDIT COMMITTEE REPORT CONTINUED

2 June 2021

Chairman’s
Audit
Committee
Letter

As Chair of the Audit Committee (the ‘Committee’), I am pleased to
present the Committee’s report for the financial year ended 31 March
2021.

This is my final report as Chairman of the Audit Committee as I will step
down from this role following the Annual General Meeting in July 2021.
Rosie Shapland, a fellow Non-Executive Director and a current member
of the Committee, will succeed me as Chairman. Rosie is a Chartered
Accountant and was previously an audit partner at PwC. Rosie also
serves as Chair of the Audit Committees for both Foxtons Group plc
and PayPoint plc. In accordance with the UK Corporate Governance
Code, the Board considers that Rosie has significant, recent and relevant
financial experience, based on her previous role at PwC and on her
current Non-Executive Director roles.

On an ongoing basis, the Board reviews the composition of the
Committee to establish that it remains proportionate to its role and
responsibilities. The Board also appointed Lesley-Ann Nash as a Non-
Executive Director from January 2021, who also sits on the Audit
Committee.

The report is intended to provide shareholders with an insight into
how key topics are considered during the year, together with how the
Committee discharged its responsibilities.

The report details the key activities of the Committee during the year
under review, alongside its principal responsibilities. These can be found
on page 155.

Covid-19
During the year, the Committee considered potential risks arising
from the ongoing uncertainty surrounding the impact of the Covid-19
pandemic and long-term viability. Full details of our going concern
review are contained on page 81, following which we concluded that
Workspace continues to be a viable business and remains a going
concern.

Review of material issues
The Audit Committee has a key role in checking that the Group’s
narrative reporting gives a fair, balanced and understandable assessment
of the Group’s position and prospects and establishing that the financial
statements provide a true and fair view of the Group’s financial affairs. As
part of this process, we considered the significant financial judgements
made during the year, along with other key financial reporting issues. In
this context, we considered the twice annual valuation of the investment
portfolio as a significant matter, for which further details are provided on
page 159.

We also considered, as we do on a regular basis, the potential for fraud
in revenue recognition, scope for management override of controls
and compliance with regulations. We found no concerns arising from
this review.

A description of the main activities and information on the other
significant issues that the Committee considered during the year can be
found on 156 to 159.

2021 Annual Report
After reviewing the reports from management and, following discussions
with the External Auditor and valuers, the Committee is satisfied that:
– Both the External Auditor and valuers remain independent and

objective in their work

– The financial statements appropriately addressed the key judgements

and key estimates

– The Group has adopted appropriate accounting policies

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AUDIT, RISK AND INTERNAL CONTROL CONTINUED
AUDIT COMMITTEE REPORT CONTINUED

Financial Reporting Council (FRC) review
The Group received a letter from the Financial Reporting Council
concerning its limited scope review of the Group’s Annual Report and
Accounts for the year ended 31 March 2020. In response to the letter,
we provided the FRC with further information relating to assumptions
underlying our valuation and have made some minor amendments to the
disclosures in note 10, Investment Property.

The FRC review was based on the Annual Report and Accounts and did
not benefit from detailed knowledge of the business or an understanding
of the underlying transactions entered into. It was, however, conducted
by staff of the FRC who have an understanding of the relevant legal and
accounting framework.

Committee effectiveness
This year the Committee’s effectiveness was formally reviewed as part of
the external Board evaluation process and I am pleased to report that it
was found that the Audit Committee continues to operate effectively.

In addition, the quality of the papers and presentations by management,
the level of challenge from the Audit Committee, KPMG and CBRE and
the quality of discussions held, gives the Committee further comfort and
assurance that it is performing its role effectively.

I hope that you find assurance from this report on the work undertaken
by the Committee during the year.

Chris Girling
Chairman of the Audit Committee

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AUDIT, RISK AND INTERNAL CONTROL CONTINUED
AUDIT COMMITTEE REPORT CONTINUED

Role of the Audit Committee

The Audit Committee
reviews and monitors
the integrity of the
Company’s financial
reporting in advance of
its consideration by the
Board. The Committee
oversees the relationship
with the External Auditor
in order to assess their
effectiveness and
to annually assess
their independence
and objectivity.

How the Committee operates

The Audit Committee is composed solely of independent
Non-Executive Directors, with a wide diversity of experience,
including finance, property and marketing. Chris Girling, as
a Chartered Accountant with many years of senior financial
experience, satisfies the requirement of having appropriate
recent and relevant financial experience.

Meetings of the Audit Committee coincide with key dates in
the financial reporting and audit cycle. During the year, the
Committee met on three occasions, in May and November
2020 and in March 2021. In addition, the Committee met in May
2021 to review the 31 March 2021 Annual Report along with the
property valuation and the findings of the External Auditor.

A forward plan of agenda items guides the business to
be considered at each meeting and is regularly reviewed
and developed. This assists and facilitates the work of the
Committee, enabling it to give thorough consideration to
matters of particular importance to the Company.

The Committee receives information in advance of its meetings
including information from management and detailed reports
from the External Auditor including the audit report. The
Committee meets privately with the External Auditor, at least
annually and liaises with Company management in considering
areas for review.

The Committee Chair also meets separately with the Chief
Financial Officer, Chief Executive Officer and members of the
Audit team at KPMG. These meetings inform the work of the
Committee by identifying key areas of focus and emerging
issues.

The Committee regularly invites the external audit lead partner,
Nick Knight of CBRE, the Chairman of the Board, the Chief
Executive Officer, the Chief Financial Officer and Head of
Finance to its meetings.

Meetings of the Committee are held in advance of the Board
meetings to allow the Committee Chairman to provide a report
on the key matters discussed, to the Board, and for the Board to
consider any recommendations made.

All of this, along with ongoing challenge, debate and
engagement, allows the Committee to discharge its
responsibilities effectively.

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Contents

AUDIT, RISK AND INTERNAL CONTROL CONTINUED
AUDIT COMMITTEE REPORT CONTINUED

THE ROLE OF THE AUDIT COMMITTEE
CONTINUED

The Audit Committee
works with the Risk
Committee, established
in September 2020, to
review the adequacy
and effectiveness of
the Group’s risk
management and
internal control.

Chris Girling
Chairman of the Audit Committee

Audit Committee responsibilities

Financial reporting
– Review the year-end and interim financial statements and
monitor the reporting process. Information on significant
matters in relation to the financial statements that were
considered by the Committee can be found on page 159.

– Advise the Board on the Group’s viability and going concern
status. More information on the Committee’s assessment of
the Group’s viability and going concern status can be found
on pages 81 and 82.

– Review the content of the Annual Report and Accounts and
advise the Board on whether, taken as a whole, they are fair,
balanced and understandable and provide the information
necessary for shareholders to assess performance, the
business model and strategy. The Group’s strategy and
business model are explained on pages 29 to 33 and
11 to 19 respectively.

External audit
– Assess the work of the External Auditor and any significant

financial judgements made by management. More information
is available on pages 157 to 159.

– Review and monitor the objectivity and independence of the
External Auditor, including its policy governing the provision
of non-audit services. Refer to page 158 for more information.

– Review and monitor the effectiveness of the external audit
process and the ongoing relationship with the External
Auditor. More information on our process of safeguarding
auditor independence is available on page 158.

Financial risks
– Remains responsible for oversight and review of controls

relating to financial risks and risks relating to finance
IT systems.

– Review the appropriateness of accounting policies and

– Review the operational effectiveness of key controls in place

practices.

to manage finance risk.

– Review the reports on viability and going concern including
the assumptions included in plans, key risks considered, and
the sensitivities tested.

More information on the Group’s internal controls and risk
management process is available on page 166 and the work of
the Risk Committee is available on page 164.

Governance, best practice and development
– Keeping up to date with developments regarding control
environments (with advice from the External Auditor).
– Keeping up to date on investor, shareholder and market
sentiment (with advice from the Company’s brokers).

– Keeping up to date with regulatory and legislative matters
relevant to the Company (with advice from the Company’s
legal advisers).

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AUDIT, RISK AND INTERNAL
CONTROL CONTINUED
AUDIT COMMITTEE REPORT
CONTINUED

Key matters
considered by
the Committee
during the year

Contents

AUDIT COMMITTEE MEETING HELD ON 27 MAY 2020

AUDIT COMMITTEE MEETING HELD ON 5 NOVEMBER 2020

AUDIT COMMITTEE MEETING HELD ON 10 MARCH 2021

FINANCIAL AND NARRATIVE REPORTING

– Reviewed the year-end financial statements including

– Considered the interim financial results and

– Considered a first draft of the Audit

key judgements, estimates, assumptions and the going
concern and viability statements.

– Considered the content of the Annual Report and Accounts
and advised the Board on whether, taken as a whole, the
Annual Report and Accounts were fair, balanced and
understandable and whether they provided the necessary
information for shareholders to assess the Company’s
position, performance, business model and strategy.
– Discussed the 2019/20 viability statement and going

concern assumption with our External Auditor.

– Reviewed a tax report and confirmation of compliance with

REIT tax regime.

– Discussed the presentation of the 31 March 2020 portfolio

valuation by the independent valuers.

– Considered the proposal for a final dividend.

half-year statements.

– Reviewed and discussed a report from KPMG,
summarising their findings arising from the
half-year review of the results of the Company
for the six months ended 30 September 2020.

– Discussed a report, from Head of Finance,

providing a review of the half year accounts.
– Discussed a report from the Chief Financial
Officer on the going concern and viability
assessment.

– Reviewed letters of representation issued to
the External Auditor for the half-year results
prior to their being agreed by the Board.
– Reviewed a report on the audit plan and

strategy for the year ended 31 March 2021.

Committee Report for the year ended
2021.

– Considered the letter from the FRC and

reviewed the Company’s response.

EXTERNAL AUDIT

– Considered the External Auditor’s report on the 2019/20

– Considered the scope and cost of the external

audit.

– Reviewed letters of representation issued to the External

Auditor for the full-year results prior to their being agreed
by the Board.

– Reviewed the independence of the External Auditor.
– Held a private meeting with the External Auditor.

audit for the year ended 31 March 2021.
– Reviewed the materiality threshold for the

2020/21 audit.

– Considered the audit plan and strategy for the

year ending 31 March 2021.

– Considered year-end audit plan.
– Reviewed a report on non-audit
services and the fees paid to the
External Auditor during the last
financial year.

GOVERNANCE

– Agreed the narrative of the 2019/20 Audit Committee

– Approved the Committee timetable and

– Updated the Committee’s Terms of

Report.

– Reviewed the corporate governance sections of the 2020

Annual Report.

– Reviewed the requirement for an internal audit function.

planner which detailed the areas of focus for
2020/21.

– Considered the conclusions from the review
of effectiveness of the external audit process
for the 2020 year-end audit.

Reference.

– Discussed the non-audit assignments

policy.

– Discussed the approach for the
externally facilitated Committee
effectiveness review.

Risk management and internal control
Before the Risk Committee was established in September 2020, the Audit Committee, at its 27 May 2020 meeting:
– Reviewed the principal and operational risks identified for the Group.
– Discussed a summary of the assurance work undertaken within the financial year.
– Considered the effectiveness of the Company’s procedures for preventing fraud.
– Considered an update on health and safety and considered the Health and Safety Policy Statement.
– Considered the need for an internal audit function.

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AUDIT, RISK AND INTERNAL CONTROL CONTINUED
AUDIT COMMITTEE REPORT CONTINUED

External audit

KPMG was appointed as the External Auditor
in January 2017 following a formal tender
process. At the 2020 AGM, shareholders
re-appointed KPMG as the External Auditor
of the Group for the year ended 31 March
2021 and authorised the Committee to fix the
External Auditor’s remuneration. The current
lead audit engagement partner, Richard Kelly,
is in the fourth year of his term.

Audit fees
Fees payable to the External Auditor for audit
and non-audit services are set out in note 2
on page 218. This year, the non-audit services
performed by KPMG included:
– the review of the Group’s half-year results;

and

– provision of a comfort letter in relation to
the Group’s bond issuance. This work was
required to be undertaken by a reporting
accountant and we believed that KPMG, as
our auditors, were best placed to provide
these services.

Audit quality
The Committee has primary responsibility
for overseeing the relationship with, and
performance of, the External Auditor, in
particular with regards to the independence,
quality, rigour and challenge of the external
audit process. Annually, the Committee
assesses the qualifications, expertise, resources
and independence of the Group’s External
Auditor, as well as the effectiveness of the
audit process through discussion with the Chief
Financial Officer and Head of Finance. The
Chair of the Committee also meets with the
KPMG Partner.

As part of the effectiveness review, a
questionnaire was issued, following the March
2020 year end, to Committee members, as well
as regular attendees of the Committee and
those involved in the external audit process.
Views were also sought from key members of
the Finance team and senior management also
involved in the external audit process.

Questions were posed around the:
– Effectiveness of the external audit including

the quality and scope of the audit plan,
reporting and the level of fees for the audit.

– Delivery and execution of the agreed

external audit process for the 2019/20
financial year.

– Efficiency and performance of the audit

team as well as their technical competence.
– Communication and engagement between
the senior management team, the Finance
team, KPMG and the Committee.

The Committee discussed a summary of the key
findings and results at its meeting in November
2020. No significant concerns were identified.

The Committee’s relationship with the
External Auditor is one of openness and
professionalism, and the results of the review
were discussed with KPMG to monitor the
continuing quality of audit services.

From its discussions during the year, the
challenges presented to the auditors and
a review of the reporting received, the
Committee considers that the auditor provides
appropriate professional challenge and reports
its findings in an open and direct manner.

The Committee remains satisfied:
– With the effectiveness of the external audit

and the interaction between the auditors and
the Committee.

– As to the External Auditor’s qualifications,

expertise and resources.

Audit independence and objectivity
Furthermore, as part of its deliberations, the
Committee reviews a report on the audit
firm’s own internal quality control procedures
together with the policies and processes for
maintaining independence and monitoring
compliance with relevant requirements.

KPMG LLP has confirmed to the Committee
that:
– The audit of the consolidated financial

statements is undertaken in accordance
with the UK firm’s internal policies and
procedures.

– It has internal procedures in place to identify
any aspects of non-audit work which could
compromise its role as auditor and to ensure
the objectivity of its audit report.
– It believes that, in their professional

judgement, the safeguards they have in
place sufficiently guard against the threats to
independence.

– The total fees paid by the Group during the
year do not represent a material part of its
firm’s fee income.

– It considers that it has maintained audit

independence throughout the year.

The Committee is satisfied that the External
Auditor is independent.

The Audit Committee will continue to review
the effectiveness and independence of the
External Auditor each year.

The Group complies with the Competition
and Markets Authority Order 2014 relating to
audit tendering and the provision of non-audit
services, and it is the Group’s intention to put
the audit out to tender at least every ten years.
The external audit was last tendered in 2017
following which the External Auditor changed
from PricewaterhouseCoopers LLP (PwC) to
KPMG and there are no current plans to re-
tender the services of the External Auditor.

There are no contractual obligations which
restrict the Committee’s choice of external
auditor or which put in place a minimum period
for their tenure.

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AUDIT, RISK AND INTERNAL CONTROL CONTINUED
AUDIT COMMITTEE REPORT CONTINUED

Safeguarding auditor independence

NON-AUDIT SERVICES
As required by the Code, the Audit Committee has a formal
policy governing the engagement of our External Auditor,
KPMG, to supply non-audit services and to assess the
threats of self-review, self-interest, advocacy, familiarity and
management. KPMG has discontinued the provision of all non-
audit services (other than those closely related to the audit) to
all FTSE 350 companies, meaning non-audit services will be
confined to a more limited scope of work than that defined by
the Audit Committee Terms of Reference.

During the year, KPMG were asked to provide additional
services in the form of a comfort letter in relation to the
Group’s issue of the green bond. These services are closely
related to the audit and both the services provided and the
fees were within the limitations set out in the formal policy.

MANAGEMENT MANAGEMENT THREAT
This occurs when the audit firm performs non-audit services
and management make judgements based on that work.

– The Group does not use the External auditor for any services

which would be considered management responsibility.

FAMILIARITY A FAMILIARITY THREAT
This is where, due to a long or too close a relationship, the
External Auditor’s independence is affected.

– The Audit Committee prohibits the hiring of former

employees of the External Auditor associated with the
Group’s audit into management roles with significant
influence within the Group within two years following their
association with the audit, unless the Chairman of the
Audit Committee gives prior consent. Annually, the Audit
Committee will be advised of any new hires that fall under this
policy. There have been no instances of this occurring to date.

– The Audit Committee monitors on an ongoing basis

the relationship with the External Auditor, to check its
continuing independence, objectivity and effectiveness by
reviewing its tenure, quality and fees.

SELF REVIEW A SELF-REVIEW THREAT
This is where, in providing a service, the external audit team
could potentially evaluate the results of a previous service
provided by the external audit firm.

– The Group does not use the External Auditor for any

services which would involve self-review of their own work.

SELF-INTEREST A SELF-INTEREST THREAT
Where a financial or other interest (of an individual or the
external audit firm) could inappropriately influence an
individual’s judgement or behaviour.

The Audit Committee specifically performs the following:
– If the External Auditor is to be considered for the provision
of non-audit services, the scope of work and fees must
be approved in advance by the Chief Financial Officer,
the Company Secretary and the Chairman of the Audit
Committee. For larger assignments, in excess of £100,000,
this would involve a competitive tender process, unless
there are compelling commercial or timescale reasons to
use the External Auditor or another specific accountancy
firm.

– The Committee shall review and recommend to the Board

the Company’s formal policy on the provision of non-
audit services by the auditor. Such policy shall specify the
circumstances in which prior approval of non-audit services
by the Committee is required and specify any internal
processes that must be followed.

– It will not accept significant contingent fee arrangements

with the External Auditor.

ADVOCACY AN ADVOCACY THREAT
This is where the external audit firm or its personnel promote
an audit client’s position to the extent where the External
Auditor’s objectivity is compromised.

– The Group does not use the External Auditor in an

advocacy role.

2021 ANNUAL REPORT AND
ACCOUNTS – FAIR, BALANCED
AND UNDERSTANDABLE
On behalf of the Board, the Committee
discussed a report from the CFO and Head of
Finance covering the financial statements and
whether the Annual Report and Accounts:
– Had clearly reported the impact of Covi-19

on the financial statements

– Provided clear explanations of KPIs and link

to strategy

– Explained our business model, strategy

and accounting policies simply, using clear
language

– Included clear signposts to additional

information

– Was in accordance with the information
provided to the Board during the year

The Committee considered whether the
Annual Report and Accounts:
– was a fair, balanced and an understandable
assessment of the Company’s position and
prospects

– provided the necessary information

for shareholders to assess the Group’s
performance, business model and strategy

– had been written in straightforward

language, without unnecessary repetition

The Directors are responsible for preparing
the Annual Report and Accounts. The
Committee reported that based on its review
of the relevant evidence. It was satisfied that
the Annual Report and Accounts, taken as a
whole, is fair, balanced and understandable,
and provides the information necessary
for shareholders to assess the Group’s
performance, business model and strategy.

The Board’s statement on the Annual Report
and Accounts is set out in the statement of
Directors’ responsibilities on page 202.

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AUDIT, RISK AND INTERNAL CONTROL CONTINUED
AUDIT COMMITTEE REPORT CONTINUED

Significant matters considered by the Committee

The Audit Committee considers all financial
information published in the full and interim
financial statements and considers accounting
policies adopted by the Group, presentation
and disclosure of the financial information and,
in particular, challenging the key judgements
made by management in preparing the
financial statements.

The Audit Committee pays particular attention
to matters it considers to be important by
virtue of their impact on the Group’s results,
or the level of complexity, judgement or
estimation involved in their application
on the consolidated financial statements.
The main areas of focus during the year
are set out below:

MATTER CONSIDERED:

ACTION TAKEN BY THE COMMITTEE

VALUATION OF
THE INVESTMENT
PROPERTY
PORTFOLIO

The valuation of the investment property portfolio is inherently subjective,
requiring significant judgement. The outcome is significant for the Group in
terms of its investment decisions, results and remuneration, and is a major
component of Total Property Return, one of our KPIs.

The valuation is conducted externally by independent valuers, CBRE,
one of the world’s largest commercial real estate services firms.

CBRE presented the year-end valuation to the Audit Committee, who
reviewed the methodology and outcomes of the valuation, challenging
the key assumptions and judgements and gave particular focus to any
alternative procedures undertaken in light of Covid-19. They also considered
the objectivity and independence of the valuers.

KPMG met with the valuers and presented their views on the valuation to
the Committee, as well as an explanation for how the valuation is audited.
The Committee considered that it was satisfied that the methodology,
assumptions and judgements used by the valuers were appropriate, and
that the valuations were suitable for inclusion in the financial statements.

In addition, the Audit Committee reviewed
a number of other key matters which have
been considered by management and
discussed with KPMG, including the accounting
treatment for discounts and deferrals in the
year and uncertainty relating to collection of
trade receivables. Further information can
be found in the section on principal risks and
uncertainties on pages 63 to 70.

Portfolio valuation
Our property portfolio is independently
valued twice annually by our external valuers,
CBRE Limited.

Our properties are critical to our business
and the valuation demonstrates the value
that we are delivering to our shareholders.
It is a measure of how well we are managing
our buildings and driving rental income.
Furthermore, the valuation is a significant
part of both our net asset value and Total
Property Return, which are both key
performance indicators.

Given its significance, both management
and the Committee monitor the objectivity
and independence of the valuers, and review
the methodology and outcomes of the
valuation, challenging the key assumptions
and judgements.

A number of meetings are held between key
management and CBRE ahead of the valuation
at which the inputs and methodology of the
valuation are discussed. Key discussions include:
– London commercial property market:
current trends and circumstances
expected to affect the market are
discussed, including this year the impact
of the Covid-19 pandemic.

– Comparable market evidence: recent

transactions are considered and compared
to assumptions made in valuing our portfolio.

– Development projects: we provide CBRE
with any updates to ongoing or future
schemes and discuss the assumptions CBRE
have made, particularly for more complex
schemes where more significant levels of
judgement are required.

– Estimated rental values: the estimated
rental values proposed by CBRE are
discussed and reviewed, with management
ensuring that these are in line with our recent
rental activity.

– Property information: we provide CBRE with
information on any changes to properties
that may affect the valuation.

– Other inputs used by the valuers are

reviewed and discussed.

The valuation is presented to the Audit
Committee, who review the outcomes and
challenge the methodology and assumptions.

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AUDIT, RISK AND INTERNAL CONTROL CONTINUED
AUDIT COMMITTEE REPORT CONTINUED

Developing a robust Viability Statement

As part of the continued
development of the Group’s
Viability Statement, existing
processes were strengthened
so that risks were identified,
understood and reassessed
over the period. The following
factors were considered:
– The Group’s current

financial and operational
position and the current
economic outlook.

– The Group’s cash flows,
financing headroom and
financial ratios.

– Reassessment of key risks
and their potential impact
on the business model.

The process we undertook
was as follows:

Our Viability
Statement

See page 81

Our Going Concern
Statement

See page 81

1. Heads of Department.
2. Read about the work of the Risk
Committee on pages 161 to 166.

MATTER CONSIDERED:

ACTION TAKEN BY THE COMMITTEE

STAGE 1:
RISK IDENTIFICATION

RESPONSIBILITY:
– Executive Committee.
– Risk Committee.2
– Senior management.1

STAGE 2:
RISK ASSESSMENT

RESPONSIBILITY:
– Executive Committee.
– Risk Committee.2
– Senior management.1

STAGE 3:
SCENARIO SENSITIVITY
ANALYSIS

RESPONSIBILITY:
– Executive Committee.
– Senior management.1

STAGE 4:
CONCLUSIONS

RESPONSIBILITY:
– The Board.
– Audit Committee.
– Executive Committee.
– Senior management.1
– External Auditor.

The strategic and operational
risks were reviewed to
identify the principal risks to
viability over the period under
consideration. The risks that
would impact solvency and
liquidity, either individually
or in combination with other
risks, were considered.

For each risk, the following
were considered:
– Our risk appetite (the level
of risk the Board is willing
to take)

– The controls in place to

mitigate the risk
– The quantum of risk

For those risks identified
as being severe enough to
impact the viability of the
Group, sensitivity analysis was
performed to understand the
potential impact on liquidity
and financial ratios.

The Audit Committee
considered the findings from
this analysis and presented it
to the Board, which was given
the opportunity to question
the process and findings.

Risk management and internal control
During the year, the Board established a
Board Risk Committee. Its members include
Damon Russell (Chairman), Chris Girling, Rosie
Shapland and Lesley-Ann Nash. The Risk
Committee oversees the effectiveness of risk
management throughout the organisation,
advises the Board on risk appetite, tolerance
and strategy and provides recommendations
to the Board on the Group’s approach to
risk management and the effectiveness of
the internal control environment (except for
financial controls).

Further details of the work of the Risk
Committee can be found on page 161.

The Committee remains responsible for
oversight and review of controls relating to
financial risks and risks relating to finance IT
systems. An information flow is maintained
between the Audit and Risk Committees
to enable each Committee to perform their
respective roles.

The Audit Committee has reviewed the Group’s
system of financial controls during the year
with no significant failings or weaknesses
identified. However, any such system can only
provide reasonable and not absolute assurance
against any material misstatement or loss.

Key elements of the Group’s system of internal
financial controls include:
– A comprehensive system of financial

reporting.

– An organisational and management Board

structure with clearly defined levels of
authority and division of responsibilities.
– An agreed and defined framework of risk,
assurance and key performance indicators
measuring performance.

– A self-certification programme whereby
control owners annually certify whether
controls are operating effectively.

Contents

During the year, the Audit Committee
focused on the extraordinary effects of
Covid-19, which posed many new challenges
including managing the safety of customers,
employees and other stakeholders in line with
Government guidelines.

Internal audit
Due to its size, the Group does not have an
internal audit function, a matter reviewed by
the Audit Committee during the year. The
Committee has advised the Board that it
considers that there is no need to establish an
internal audit function but there is a plan to
engage an independent third party to perform
reviews of some key areas.

To supplement reviews of risk management
and internal control, a programme of
operational, facilities management and health
and safety reviews will be undertaken across
our properties by qualified senior head office
personnel. Any significant findings will then
be reported to the Risk Committee. Further to
this, all key controls are recorded on a central
register and control owners are required to
certify the effectiveness of controls for which
they are responsible and provide details of
further actions to address any identified
ineffectiveness. No significant issues were
identified during the year.

In February 2020 we engaged PwC to conduct
a review of the Group’s internal audit and risk
requirements, and their work has continued
during this financial year. Further information
on this and the work of the Risk Committee
can be found on pages 161 to 166.

Whistleblowing
Policy

See page 85

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AUDIT, RISK AND INTERNAL CONTROL CONTINUED

Risk Committee Report

Contents

Damon Russell
Chairman of the Risk Committee

The creation of the Risk
Committee and our updated
risk management framework
further strengthens the Group’s
risk management approach.

Attendance at Risk
Committee meetings

Damon Russell (Chairman)1,4

Chris Girling1,4

Rosie Shapland2,4

Lesley-Ann Nash3,4

Member
since

Meetings
attended

2020

2021

2/2

1/1

1. Damon Russell and Chris Girling
were appointed as the inaugural
members of the Committee in
September 2020.

2. Rosie Shapland was appointed in

November 2020 and attended one
meeting during the year.

3. Lesley-Ann Nash was appointed

in January 2021 and attended one
meeting during the year.

4. Biographies of Committee members,

including a summary of their
experience, can be found on pages
106 to 109.

5. The Company’s Head of Legal &

Assistant Company Secretary acts
as the Secretary to the Committee
and attends all meetings.

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Contents

AUDIT, RISK AND INTERNAL CONTROL CONTINUED
RISK COMMITTEE REPORT CONTINUED

2 June 2021

Risk
Committee
Chairman’s
Letter

I am pleased to present the Risk Committee report for the financial
year ended 31 March 2021. This is the first report of the Risk Committee
(the ‘Committee’) following the establishment of the Committee in
September 2020. During the year, we welcomed Rosie Shapland and
Lesley-Ann Nash to the Committee following their appointments to the
Board in November 2020 and January 2021 respectively.

The Report of the Risk Committee details the key activities of the
Committee alongside its principal responsibilities. These can be found
on pages 164 to 165.

Principal risks
During the year the Committee reviewed the Group’s principal risks. See
pages 63 to 70 for further details on our principal risks and uncertainties.

Review of our risk management framework
The Group engaged PwC to conduct a review of the Group’s risk
requirements during 2020. Following this review, the Group has
updated its risk management framework and the Risk Committee
was established by the Board in September 2020 to oversee the risk
management framework and advise the Board on risk appetite, tolerance
and strategy. The Risk Committee receives reports from the Executive
Committee, which in turn receives reports from a newly formed Risk
Management Group (which has replaced the Group’s former operational
risk committee). The Risk Management Group is chaired by the CFO
and consists of nine other members from across the business, and is
responsible for implementing and embedding the Group’s risk policies
within the business.

Further details on the Group’s risk management framework can be found
on page 166 of this report.

Review of our internal controls framework
During its April 2021 meeting, the Committee discussed the Group’s
internal controls framework and the Group’s newly introduced self-
certification process. As part of this process, control owners are required
to annually self-certify whether the controls they are responsible for are
operating effectively and, where they are not, identify the further action
required. We were pleased to note that the self-certification process
demonstrated that overall our key controls remain effective, and in
particular that no significant weaknesses or failures had been identified.

Covid-19
Since its formation, the Committee has received regular reports and
updates on the risks posed to the Group by Covid-19, and the measures
the Group has taken in response. In particular, the Committee has
received an overview of the risk assessments conducted by the Group,
the hygiene and social distancing policies and procedures implemented
and communications with staff. Further details on the Group’s response
to Covid-19 can be found on pages 16, 45, 50, 115 and 201.

Risk Committee effectiveness
The Committee’s effectiveness was subject to review as part of the
externally conducted Board evaluation conducted during March 2021.
I am pleased to report that no significant issues were raised, and the
review confirmed that the Risk Committee operates in an efficient and
effective manner.

I hope that you find this report informative and can take assurance from
the work undertaken by the Committee during the year to deliver its key
responsibilities.

Damon Russell
Chairman of the Risk Committee

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AUDIT, RISK AND INTERNAL CONTROL CONTINUED
RISK COMMITTEE REPORT CONTINUED

The role of the Risk Committee

The Risk Committee
oversees the effectiveness
of risk management
throughout the organisation,
advises the Board on risk
appetite, tolerance and
strategy and provides
recommendations to the
Board on the Group’s
approach to risk
management and the
effectiveness of the internal
control environment.

The Committee’s Terms of Reference are available on
www.workspace.co.uk/investors/about-us/governance/
committee-terms-of-reference and they will be updated,
as required, to reflect any changes in best practice.

How the Committee operates

During the year under review, the Committee met on two
occasions, in September 2020 and in January 2021. In addition,
the Committee met in April 2021 to review the 31 March 2021
Annual Report and in particular the disclosures related to risk
management and principal risks.

A forward plan of agenda items informs the business to
be considered at each meeting and is regularly reviewed
and developed. This assists and facilitates the work of the
Committee, enabling it to give thorough consideration to
matters of particular importance to the Group. The Committee
receives information in advance of its meetings, including
information from management.

The Committee may, at its discretion, invite other people to
attend its meetings. Those people and advisers listed in the
table below attended meetings during the year at the request of
the Committee Chairman.

Attendee

Dave Benson

Position

Chief Financial Officer

Vivienne Frankham

Head of Finance

Angus Boag

PwC

Development Director

Adviser

Meetings of the Committee are held in advance of the Board
meetings to allow the Committee Chairman to provide a report
of the key matters discussed, to the Board, and for the Board to
consider any recommendations made.

The Audit Committee remains responsible for oversight of
financial risks and controls. All members of the Risk Committee
are also members of the Company’s Audit Committee, enabling
key information or recommendations to be easily shared
between the Committees.

All of the above, along with ongoing challenge, debate
and engagement, allows the Committee to discharge its
responsibilities effectively.

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Contents

AUDIT, RISK AND INTERNAL CONTROL CONTINUED
RISK COMMITTEE REPORT CONTINUED

THE ROLE OF THE RISK COMMITTEE
CONTINUED

Risk Committee responsibilities

Risk appetite, tolerance and strategy
– Advise the Board on the Group’s overall risk appetite,

tolerance and strategy, and the principal and emerging risks
the Company is willing to take in order to achieve its long-
term strategic objectives. See page 165 for details of how the
Committee has considered risk appetite and strategy during
the year.

– Advise the Board on the likelihood and impact of principal
risks materialising, and the management and mitigation of
principal risks to reduce the likelihood of their incidence
or their impact. See pages 63 to 70 for information on the
Committee’s consideration of principal risks.

– Review the Group’s procedures for preventing and/or

detecting fraud.

– Review the Group’s procedures for the prevention and

detection of bribery and monitor the reports generated by
such procedures. See page 84 for more information on our
Anti-Bribery Policy.

Governance, best practice and development
– Keeping up to date with external developments relating to

control environments.

– Keeping up to date with regulatory and legislative matters

relevant to the Group.

Internal controls and risk management processes
– Review the adequacy and effectiveness of the Group’s

overall risk assessment processes that inform the Board’s
decision-making, including the design, implementation and
effectiveness of those processes.

– Review the effectiveness of the Group’s internal controls

(with the exception of the internal financial controls which
remain the responsibility of the Audit Committee) and risk
management systems.

– Review whistleblowing arrangements whereby employees

may, in confidence, raise concerns about possible
improprieties in financial reporting or other matters, to receive
assurance that there are proportionate and independent
procedures in place. See page 85 for more information on our
Whistleblowing Policy.

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Contents

AUDIT, RISK AND INTERNAL CONTROL CONTINUED
RISK COMMITTEE REPORT CONTINUED

Key matters
considered by
the Committee
during the year

SEPTEMBER 2020

JANUARY 2021

RISK APPETITE, TOLERANCE AND STRATEGY

– Considered and discussed the risks to the Group of the

Covid-19 pandemic and the actions the Group was taking in
response. See pages 16, 45, 50, 115 and 201 for further details
of the Group’s response to Covid-19.

– Reviewed and discussed the Group’s principal risks and any
emerging risks. See pages 63 to 70 for further details on the
Group’s principal risks.

– Considered key contractor and supplier risks and the actions

in place to mitigate them.

INTERNAL CONTROLS AND RISK MANAGEMENT SYSTEMS

– Reviewed and approved the Group’s updated risk

– Reviewed the Group’s risk information and reporting

management framework. See page 166 for further details.
– Reviewed the Group’s Anti-Bribery Policy and procedures.

procedures.

– Reviewed the Group’s procedures for detecting and

See page 84 for further details.

preventing fraud.

GOVERNANCE

– Noted the establishment of the Committee and its Terms of

– Reviewed an update on the Group’s governance, legal and

Reference.

– Agreed the proposed meeting schedule of the Committee.
– Agreed the forward plan of agenda items.
– Discussed information flow from the Committee to the Board.

compliance risks. See page 84 to 85 for further details on the
Group’s approach to key compliance areas.

The Committee also met in April 2021, where amongst other matters it discussed the link between the Group’s principal risks and its viability and the Group’s internal controls
framework and the process by which control owners self-certify that the controls they are responsible for are operating effectively.

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Contents

AUDIT, RISK AND INTERNAL CONTROL CONTINUED
RISK COMMITTEE REPORT CONTINUED

Our risk management framework

OUR RISK PROCESS

BOARD
– Sets the Group’s overall risk appetite, tolerance and strategy.
– Receives advice and recommendations from the Risk Committee

(and the Audit Committee in respect of financial risks).

1. RISK IDENTIFICATION
– Risks are identified when projects are

being considered or through being raised
organically by members of staff.

– Identified risks are captured in

RISK COMMITTEE
– Oversees the risk management

framework

AUDIT COMMITTEE
– Oversees internal financial controls.
– Oversees financial risks and risks relating

– Advises the Board on risk appetite,

to financial IT systems.

tolerance and strategy.

– Oversees all risks except financial risks

and risks relating to financial IT systems.

EXECUTIVE COMMITTEE
– Oversees and manages the Group’s day-to-day risk

management procedures.

– Reports to the Risk Committee on the operation and

effectiveness of controls.

RISK MANAGEMENT GROUP
– Responsible for the implementation and embedding of risk management activities.
– Reviews and challenges the risk information provided by Risk Owners.
– Reports to Executive Committee, although the Risk Committee has the power to request

attendance or reports from the Risk Management Group directly if it is felt this is necessary.

RISK OWNERS
– Each risk identified by the Group is assigned a Risk Owner.
– Risk Owners are responsible for monitoring, managing and reporting on their risks,

as well as identifying any emerging risks.

2. RISK ASSESSMENT
– Each risk is assessed and scored according
to the potential impact and likelihood of
it materialising.

– Each risk is given an Inherent Risk Score
(pre-controls) and a Residual Risk Score

(post-existing controls).

– Each risk is also assigned a

Target Risk Score representing
the Group’s risk tolerance for
that risk.

3. RISK RESPONSE
– Each Residual Risk Score
is compared to its Target
Risk Score.

– If the Residual Risk Score is
higher than the Target Risk Score,

action is taken to reduce it towards

the target.
– Controls are assigned an owner who is
responsible for monitoring whether the
controls operate effectively.

Our principal risks

See pages 63 to 70

for information on the

Group’s principal risks.

Risk Registers.

– A Risk Owner is assigned to each
risk and has responsibility for
assessing and monitoring
that risk.

4. RISK MONITORING AND

REPORTING

– Risks are regularly monitored

by the Risk Owners.

– Control owners regularly certify
that their controls continue to
operate effectively.

– The Risk Management Group oversees
this activity and escalates significant
changes and new risks to the Executive
Committee, Risk Committee and/or Board
as appropriate.

Internal audit
Due to its size, the Group does not have an
internal audit function, a matter which is
kept under review by the Audit Committee.
However, the Executive Committee mandates
a programme of operational, facilities
management and health and safety internal
audits at its properties, carried out by qualified
senior head office personnel on a rotational
basis. Any significant findings are reported to
the Risk Committee.

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REMUNERATION

Contents

Suzi Williams
Chairman of the Remuneration Committee

At Workspace, we incentivise our people
through competitive remuneration aligned
with the experience of our stakeholders
and with the Workspace culture. This ensures
delivery of our strategy. This report lays out
in more detail the approach we have taken
in this unprecedented year.

WORKSPACE’S KEY
REMUNERATION PRINCIPLES:
– Alignment with our strategy and purpose;
– A focus on performance;
– Transparency and simplicity for the benefit

of all stakeholders; and
– Consistency of application.

Complying with the Code Principles

page 168

Chairman’s statement

The work of the Remco

Remuneration at a glance

Our Remuneration Policy

Annual report on remuneration

page 169

page 172

page 173

page 178

page 182

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REMUNERATION CONTINUED

Committee
membership

The Committee
compromises of Non-
Executive Directors
and is chaired by Suzi
Williams. Details of
individual attendance
at the meetings held
during the year are set
out below.

Director

Independent

Number of
meetings
attended

Suzi Williams
(Chairman)

Stephen Hubbard

Rosie Shapland1

Lesley-Ann Nash2

Yes

8/8

1/1

1. Rosie Shapland was appointed as a Non-Executive Director

on 6 November 2020.

2. Lesley-Ann Nash was appointed as a Non-Executive Director

on 1 January 2021.

3. See page 105 for members of the Committee during the year
and their attendance at Remuneration Committee meetings.

Contents

Complying with the Code Principles

PRINCIPLE P
Remuneration policies and practices
should be designed to support strategy
and promote long-term sustainable
success. Executive remuneration should
be aligned to company purpose and
values, and be clearly linked to the
successful delivery of the company’s
long-term strategy.

Remuneration Committee (‘Remco’)
seeks to ensure that the policy:

– Is tightly aligned to strategy and to

achieving the stretching targets which
demonstrate delivery of Workspace’s
long-term strategy.

– Is based on pay for performance and
links to Group performance through
variable pay instruments.

– Supports an effective pay for

performance culture which allows us to
retain, motivate and attract highly skilled
Directors, who have a clear purpose and
are of the necessary calibre to execute
the Company’s strategy.

– Promotes the long-term ownership

culture by encouraging the acquisition
and retention of shares amongst the
Executive Directors.

– Achieves a strong alignment between
Executive and stakeholder interests.

PRINCIPLE Q
A formal and transparent procedure
for developing policy on executive
remuneration and determining director
and senior management remuneration
should be established. No director
should be involved in deciding their
own remuneration outcome.

PRINCIPLE R
Remuneration policies and practices
Directors should exercise independent
judgement and discretion when
authorising remuneration outcomes,
taking account of company and
individual performance, and wider
circumstances.

As we have noted over recent years,
four elements – clear communication,
trust, transparency and simplicity – are
critical to the Remco’s commitment to
supporting Workspace’s ability to deliver
strong and consistent long-term value for
all shareholders. The last Remuneration
Policy was approved by shareholders in
July 2020, with 99.5% of shareholders in
support. Ahead of this, the Committee
built on the foundations of our previously
well-received Remuneration Policy,
seeking to strengthen our strong and
well-respected approach to governance
to allow us to reflect the changes in
the new Code. Remco focused on
the development and refinement of
the new Remuneration Policy, as well
as the implementation of the current
policy. No Director was present for any
discussions that related directly to their
own remuneration.

As we have noted over recent years,
as a Committee, we consider whether
to apply discretion when assessing
remuneration outcomes for Executive
Directors. Before making any pay
decisions, we reflect on both the
underlying financial and wider business
performance of the Company as well
as the performance of Executive Board
Directors’ individual objectives and the
demonstration of leadership qualities
and adherence to our values. The 2020
Policy provides us with the maximum
flexibility in applying any discretion
which we may be called upon to exercise
in the current times. We stress that
Remco has carefully considered all
remuneration decisions in the context
of the wider environment Covid-19 crisis
and will continue to monitor the business
conditions and exercise judgement as
appropriate.

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REMUNERATION CONTINUED

Chairman’s
Remuneration
Committee
Letter

Contents

2 June 2021

There can be no doubt that 2020 was an exceptional year with the impact
of Covid-19. Rarely has the world seen such widespread disruption to
normal patterns of life.

On behalf of the Board, I am pleased to introduce our 2021 Remuneration
Report.

Led by the Board and Executive Committee, Workspace’s approach has
been to protect the health (including mental health) and financial well
being of employees through this period. This is discussed in more detail
on page 28. We are proud that no employees were furloughed during this
pandemic; pay and bonus arrangements continued to operate as usual
and the business did not make use of any Government backed loans. For
2021 we have awarded a 2% pay rise across the business.

‘Our focus is on maintaining a remuneration approach that motivates
our leadership and supports our strategic objectives, thereby ensuring
high performance for all our stakeholders.’

Company performance 2020/21
‘The Executive Team responded swiftly and decisively to changing
economic and operational circumstances as a result of Covid-19.’

This is my first report to shareholders as Chairman of the Committee,
having taken over from Maria Moloney on 1 January 2021. I would like
to take this opportunity to thank Maria for her contribution to the
Committee across her long tenure and to welcome Rosie Shapland and
Lesley-Ann Nash who both joined the Committee during the year.

We were pleased to receive strong support for our remuneration policy at
the 2020 AGM, with 99.5% of votes received being in favour. In line with
our commitment to maintaining a credible and transparent remuneration
framework, we contacted our largest shareholders, representing over
68% of our issued share capital, as part of that policy review.

The following pages set out the detail of how the Committee applied the
approved policy, and how we intend to apply it in the coming financial
year. It explains the key activities of the Committee and importantly,
explains how we have addressed remuneration in these unprecedented
times. At all times the Committee was, and continues to be, guided by its
key principles detailed on page 167.

The Remuneration Report will be put to an advisory vote at the 2021
AGM, and below I have provided some of the key highlights, as well as
important context.

‘The business has shown a determined and consistent commitment
to supporting our staff, our customers, and our broader stakeholders
during Covid-19.’

Through the challenges of Covid-19, the Company and the Executive
Team reacted swiftly and decisively in a fast changing environment,
showing pragmatism and strong leadership. In unprecedented conditions,
the team at Workspace pulled together and responded as a robust
and resilient team, providing support and flexibility to our people and
customers throughout the disruption. As we emerge from the crisis, this
has positioned the business strongly for recovery.

While the past year has presented its challenges, I am proud of the way
our Executive Team and employees have risen to meet those challenges.
It is a real demonstration of the strength of the unique Workspace culture,
brand and values.

The immediate priority as Covid-19 emerged was to protect the health
and safety of our people and customers. This priority of course is
ongoing. From a business perspective, we focused on preserving our
strong balance sheet, minimising the impact on our operations and
ensuring the Company had adequate liquidity.

Whilst in the year to 31 March 2021, net rental income fell 33% to £81.5m,
this was partly due to the £19.9m of rent discounts we offered to our
customers in the first quarter. This resulted in trading profit after interest
of £38.7m. Please refer to page 10 for more details.

Adjusted NAV per share was £9.38. The balance sheet remains in good
shape with loan-to-value ratio of 24%. The Board is recommending a final
dividend of 17.75p.

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REMUNERATION CONTINUED

Contents

There has also been tremendous progress in our ESG objectives and
Stephen Hubbard, our Company Chairman, discusses this in more detail
on page 7 of his report.

Remuneration outcomes in 2020/21
During this challenging year, the Committee felt it important to consider
Remuneration within the context of the broader stakeholder and
community experience. The Committee took into account share price
movements and dividend to shareholders when making decisions on
executive pay, and we have been consistently mindful of the impact on
our stakeholders more widely at this exceptional time.

Some 76% of the executive directors’ remuneration was linked to
performance via the annual bonus plan and LTIP, with the metrics used in
those plans, as detailed on pages 176 and 177 of this report.

After very careful consideration, and taking into account all relevant
factors as described and detailed throughout this annual report, the
Committee took the following decisions in respect of remuneration for
the Executive Directors:

Annual Bonus 2020/21
The Committee considered in depth the outcomes under the annual
bonus, noting the significant economic, business and social challenges
this year. We did this in the context of a business now seeing a
recovery in the share price and growth in customer demand after an
extraordinarily difficult period.

To reflect this difficult environment for our customers and stakeholders,
the Board determined it would be inappropriate to award the customer
satisfaction element of the bonus. The Board noted the substantial
financial support provided to Workspace customers during this period as
an example of the business Doing the Right Thing. On balance however,
the outcome under this measure is deemed to be nil.

The Committee noted that in spite of turbulence, profit outcomes were
met. The formulaic outcome under this element of the targets was 100%
of maximum.

The Committee agreed that the leadership team maintained focus
on key strategic priorities throughout 2020. This included significant
progress on our ESG agenda and the issuance of our first green bond.
This ensured delivery against the strategic objectives of the bonus
such that personal performance objectives were largely met. Formulaic
assessment of this element of the bonus was 80% of maximum (more
detail is provided on pages 176 to 177).

Finally, the outcome under the relative Total Property Return element
was nil.

The formulaic outcome is therefore 66% of maximum (79% of salary) for
the Executive Directors.

In determining the appropriateness of the formulaic bonus outcome the
Committee considered at length the experience of shareholders over the
period. In making the final decisions, it was deemed appropriate to take
into account both this and the fall in year on year trading profits. The
Committee was also conscious of the need to appropriately recognise
the achievements of the management team who have responded in an
outstanding way to the challenges of 2020/21, such that the business is
strongly placed for post-pandemic opportunities and growth.

Taking all of the above into account, the Committee has used its
discretion to apply a 50% reduction to the overall bonus out-turn.
This reduction reflects the profit and dividend reduction in the year
and acknowledges the broader difficulties experienced by all of our
stakeholders at this unprecedented time. This results in a bonus outcome
for the Executive Directors of 33% of maximum (39.5% of salary).

Of the bonus award, 33% will be deferred in shares for each of Graham
Clemett and Dave Benson, for three years under the Deferred Bonus Plan.

We believe this represents a balanced final position, both reflecting the
broad stakeholder experience and acknowledging the extraordinary
leadership and achievements of the Workspace team during this most
difficult of years.

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REMUNERATION CONTINUED

Contents

Remuneration Committee Evaluation
This year’s evaluation was externally facilitated. It was concluded that the
Committee continued to operate well, with further details provided on
page 146.

Through this report we seek to communicate clearly the importance
of a strategic remuneration approach in delivering high performance
at Workspace, not just in relation to leadership, but also with regard to
broader employee pay and performance. Strong alignment between
stakeholders is important to us in delivering a structure that drives long
term success for management and shareholders alike. I hope that the
following Report provides this clarity and demonstrates our commitment
to the highest standards of governance and transparency in this area.

Looking forward
There continues to be a strategic focus on ESG. This year we committed
to becoming a net zero carbon business by 2030 and published our
pathway to achieving this goal in line with the our approved Science
Based Targets and a commitment to drive down emissions of both
operational and embodied carbon. We also published a green finance
framework during the year and successfully raised £300m through
a green bond to support our green projects. We will be looking to
integrate our ESG strategy and priorities, more fully, into our variable
remuneration framework going forward.

Finally, I want to thank you for your ongoing support in this
challenging year.

Suzi Williams
Chair of the Remuneration Committee

Vesting of 2018 LTIP
The LTIP award granted to Graham Clemett in 2018 was subject to
performance conditions measured over the three financial years to
31 March 2021. The vesting of 50% of this award was subject to Total
Shareholder Return (TSR) performance relative to FTSE 350 real estate
companies, with the remaining 50% subject to Total Property Return
(TPR) versus IPD Benchmark. Having tested the performance conditions,
none of the 2018 LTIP will vest.

2021 Remuneration
Base Salary
Executive Directors will receive a basic salary increase of 2%, in line with
the level awarded to the wider workforce, and will take effect on 1 April
2021. This is in line with the Remuneration Policy commitment that
salaries will normally only increase in line with the wider workforce.

Bonus
Targets for the annual bonus are set at the beginning of the year. The
measures of the bonus for the financial year ended 2021 can be found
on page 173.

2021 LTIP
For our 2021 LTIP award, due to be granted in June, the Committee has
decided to retain the same performance conditions and targets and to
use the share price immediately prior to the date of grant to determine
the number of shares awarded. The Committee considered the grant
level in the context of share price movements and the risk of windfall
gains, but given the limited difference in share price since the last
grant, decided that no adjustment was warranted on this basis. As with
previous awards, a performance underpin applies to this award which
allows the committee to reduce vesting if performance is inconsistent
with the overall performance of the business, individual performance or
wider considerations.

Employee Remuneration
‘Alignment with wider workforce considerations and approach to
fairness.’

In recognition of their hard work in this difficult year, the average
salary increase for employees was 2%. In addition, the vast majority
of employees also received bonus awards.

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REMUNERATION CONTINUED

The work of the Remuneration Committee

Contents

We met as a Committee
8 times during the year.
We believe it is important
that the Committee keeps
up-to-date on an ongoing
basis during the year to
enable timely discussions
where business decisions
may affect remuneration.

Summary of Committee’s activities during the year

Committee governance:
– Received an update on current executive pay environment.
– Considered the incentive operating guidelines for Executive

Board Directors.

– Received the results of the internal performance evaluation of

the Remuneration Committee.

– Agreed updates to Committee Terms of Reference.
– Approved the Directors’ Remuneration Report for 2020/21.
– Reviewed the operation of Policy in 2019/20.
– Received an update on Investment Association principles and

Executive and senior management remuneration framework:
– Reviewed the shareholding guidelines for Executive Board

Directors.

– Executive Directors’ remuneration review.
– Annual bonus outcomes for 2019/20.
– Setting of performance metrics and targets for 2020/21.
– Reviewed the vesting criteria for the 2017 LTIP.
– Proposed awards under the 2020 Long Term Incentive Plan.
– Considered the impact of Covid-19 on remuneration

outcomes.

other investor body guidelines.

– Monitoring and assessing targets for 2020/21.

Remuneration framework for employees:
– Received an update on TSR performance for 2018, 2019 and

2020 LTIP awards.

– Review of wider workforce remuneration arrangements and
employment conditions throughout the Company to ensure
that they support the Company’s purpose.

– Received an update from Stephen Hubbard, as the designated

Non-Executive Director for Employee Engagement, who,
during the year, talked with a wide range of employees to
listen to their views on a wide range of matters.

Committee Performance Evaluation
– The external evaluation of the Board and its committees was
concluded in March 2021. Further details can be found on
page 146. No significant issues were identified.

Support for the Committee
During the year, we sought internal support from the CEO,
whose attendance at Committee meetings was by invitation
from the Chairman, to advise on specific questions raised by
the Committee and on matters relating to the performance
and remuneration of the senior management team. The
Company Secretary attended each meeting as Secretary to the
Committee. No Director was present for any discussions that
related directly to their own remuneration.

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REMUNERATION CONTINUED

Remuneration
at a glance

We focus our incentives
on supporting the right
behaviours with all staff
working in the best
interests of the Company
and all stakeholders.

REMUNERATION KEY

Base salary
Pension
Benefits
Annual bonus
LTIP

Contents

THE FIXED AND VARIABLE COMPONENTS
OF WORKSPACE EXECUTIVE REMUNERATION

FIXED COMPONENTS OF EXECUTIVE PAY

VARIABLE COMPONENTS OF EXECUTIVE PAY

Base salary
Reflecting market value of the role and
an individual’s experience, performance
and contribution.

Annual bonus
Reinforcing and rewarding delivery of
annual strategic business priorities, based
on performance measures relating to both
Company and individual performance.

Pension
Market competitive pensions.

Benefits
Market competitive benefits.

Trading profit after interest

Total Property Return (TPR)
Versus IPD Benchmark

Customer satisfaction

Personal performance

Total

% of salary
60%
24%
12%
24%
120%

Long Term Incentive
Plan (LTIP)
Rewarding and aligning to the delivery of
sustained long-term sector outperformance
and aligning the interests of participants with
those of shareholders.

Total Shareholder Return (TSR), relative
to FTSE 350 property companies

Total Property Return (TPR), versus IPD
Benchmark

Total

% of award
50%
50%
100%

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Contents

REMUNERATION CONTINUED
REMUNERATION AT A GLANCE CONTINUED

THE FOLLOWING DIAGRAM DEMONSTRATES HOW WORKSPACE’S PLANS
OPERATE AT ALL LEVELS WITHIN THE COMPANY.

Number of people this applies to as at 31 March 2021

223

Rewards
at all levels

Workspace’s key
objectives are reflected
in remuneration
arrangements operating
at all levels within the
Company.

All staff in the Company are eligible to participate in the
Company’s bonus scheme, all-employee share schemes,
pension scheme, life assurance arrangements and
medical insurance benefits.

Additionally, all employees participate in an annual
bonus plan. All members of the Executive Committee
and some senior staff are eligible to participate in the
Company’s LTIP. During the year, we extended LTIP
participation to a wider group of employees to further
reinforce the strong performance culture. Executive
Committee members are also required to adhere to the
Company’s shareholding guidelines.

When making remuneration decisions for the
Executive Directors, the Committee considers pay and
employment conditions elsewhere in the Group. The
Committee receives regular updates from the Executive
Directors on employee feedback. The Committee also
monitors bonus payout and share award data. The
diagram to the right demonstrates how Workspace’s
key objectives are reflected consistently in plans
operating at all levels within the Company.

EXECUTIVE COMMITTEE

Relevant elements of pay:

Fixed
SAYE and SIP
Annual bonus
LTIP

Shareholding guidelines for
Executive Directors
Supports alignment of Executive’s
interest with shareholders

EXECUTIVE COMMITTEE
& CERTAIN EMPLOYEES

Relevant elements of pay:

Fixed
SAYE and SIP
Annual bonus
LTIP

Reinforces delivery of long-term sector
outperformance

ALL EMPLOYEES

Relevant elements of pay:
Annual bonus
All employees participate in annual bonuses.
Opportunities and performance conditions
are tailored to reflect an individual’s role and
responsibilities.

SAYE and SIP
Encourages employee engagement and
reinforces our strong performance culture.
Enables all employees to share in the long-term
success of the Group and aligns participants
with shareholder interests.

Fixed
Salaries are set to reflect market value of
the role and aid recruitment and retention.
All employees are eligible for a 2:1 match on
employee pension contributions of 3% or 5%
of salary and receive a combination of benefits
relevant for their role.

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REMUNERATION CONTINUED
REMUNERATION AT A GLANCE CONTINUED

Contents

How the variable components of executive
remuneration align to our strategy

ANNUAL BONUS

LTIP

Link to strategy
The component measures
provide a good balance of
rewarding against the three
pillars of our strategy:
– Customer-led growth
– Operational excellence
– Doing the Right Thing
which are the foundations of
Workspace’s future growth.
Some measures support
some pillars more than others,
as indicated by the pillar
or pillars noted under each
measure.

Measures shown as % of salary

60%

Trading profit after interest

24%

Personal performance

Link to strategy
The balance of the two
measures is well aligned to
our strategy of driving income
growth and enhancing
shareholder value over the
longer term.

Measures shown as % of award

50%

Total Shareholder Return (TSR), relative
to FTSE 350 property companies

LINK TO STRATEGY

Customer-led growth
Operational excellence

LINK TO STRATEGY

Doing the Right Thing

24%

Total Property Return (TPR)
versus IPD Benchmark

12%

Customer satisfaction

LINK TO STRATEGY

Customer-led growth
Operational excellence
Doing the Right Thing

50%

50% Total Property Return (TPR),
versus IPD Benchmark

LINK TO STRATEGY

Operational excellence

LINK TO STRATEGY

Customer-led growth

LINK TO STRATEGY

Operational excellence

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REMUNERATION CONTINUED
REMUNERATION AT A GLANCE CONTINUED

Graham Clemett

CHIEF EXECUTIVE OFFICER

FIXED COMPONENTS OF EXECUTIVE PAY

VARIABLE COMPONENTS OF EXECUTIVE PAY

Contents

SINGLE FIGURE
FOR 2020/21 (£000)

£764.4

BASE SALARY:

£494,090

PENSION:

£49,410

BENEFITS:

£21,449

More information on page 178

OUTCOMES UNDER THE 2020/21 ANNUAL BONUS

TRADING PROFIT
AFTER INTEREST

THRESHOLD
(0% PAYABLE)

£34.6M

TOTAL PROPERTY RETURN

BENCHMARK

CUSTOMER SATISFACTION1

72%

PERSONAL PERFORMANCE

SUBTOTAL

MAXIMUM
(100% PAYABLE)

FORMULAIC OUTCOME
(% OF SALARY)

£38.6M 60%

ACTUAL: £38.7M

BENCHMARK +2%

ACTUAL: BENCHMARK -3.78%

80%

ACTUAL: N/A

MAX: 100%

ACTUAL: 80%

19%

79%

DISCRETIONARY 50% REDUCTION APPLIED TO OUTTURN

BONUS OUTTURN

60%

24%

12%

24%

120%

CEO ACTUAL
£000

£296.4

£0

£93.8

£390.2
£195.1
£195.1

OUTCOMES UNDER THE 2018 LTIP PERFORMANCE MEASURES OVER THE PERIOD 1 APRIL 2018 TO 31 MARCH 2021

THRESHOLD
(0% PAYABLE)

MEDIAN

TOTAL SHAREHOLDER
RETURN (TSR) RELATIVE
TO FTSE 350 PROPERTY
COMPANIES

TOTAL PROPERTY RETURN
(TPR) VERSUS IPD

MEDIAN

TOTAL

1. Further details can be found on page 170.

MAXIMUM
(100% PAYABLE)

OUTCOME
(% OF AWARD)

CEO
ACTUAL £000

UPPER QUARTILE

ACTUAL: 37TH PERCENTILE

UPPER QUARTILE

ACTUAL: 43RD PERCENTILE

50%

£0

OF WHICH SHARE PRICE: £NIL

50%

£0

DIVIDEND EQUIVALENT OF £NIL

100%

£0

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REMUNERATION CONTINUED
REMUNERATION AT A GLANCE CONTINUED

Dave Benson

CHIEF FINANCIAL OFFICER

FIXED COMPONENTS OF EXECUTIVE PAY

VARIABLE COMPONENTS OF EXECUTIVE PAY

Contents

SINGLE FIGURE
FOR 2020/21 (£000)

£499.8

BASE SALARY:

£340,000

PENSION:

£17,973

BENEFITS:

£0

OUTCOMES UNDER THE 2020/21 ANNUAL BONUS

TRADING PROFIT
AFTER INTEREST

THRESHOLD
(0% PAYABLE)

£34.6M

TOTAL PROPERTY RETURN

BENCHMARK

CUSTOMER SATISFACTION1

72%

PERSONAL PERFORMANCE

SUBTOTAL

MAXIMUM
(100% PAYABLE)

FORMULAIC OUTCOME
(% OF SALARY)

£38.6M 60%

ACTUAL: £38.7M

BENCHMARK +2%

ACTUAL: BENCHMARK -3.78%

80%

ACTUAL: N/A

MAX: 100%

ACTUAL: 80%

19%

79%

DISCRETIONARY 50% REDUCTION APPLIED TO OUTTURN

BONUS OUTTURN

60%

24%

12%

24%

120%

CFO
ACTUAL £000

£204.0

£0

£64.6

£268.6
£134.3
£134.3

1. Further details can be found on page 170.

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REMUNERATION CONTINUED

Contents

Our Remuneration Policy
In this section we provide a summary of the key elements of the Remuneration Policy for Executive Directors approved by Shareholders at our 2020
AGM on 9 July. In addition, we have set out how the Policy was operated in 2020/21 (which was as intended) and how it is intended to be operated in
2021/22.
You can find the full Policy at www.workspace.co.uk/investors.

REMUNERATION POLICY TABLE
The table below describes the Policy in relation to the components of remuneration for Executive Board Directors.

FIXED COMPONENTS OF EXECUTIVE PAY

PURPOSE AND LINK TO STRATEGY

OPERATION

OPPORTUNITY

OPERATION IN THE YEAR ENDED
31 MARCH 2021 (2020/21)

OPERATION IN THE YEAR ENDING
31 MARCH 2022 (2021/22)

Base salary
To reflect market value of
the role and an individual’s
experience, performance and
contribution.

Salaries are normally reviewed annually. Salary
levels take account of:
– Role, performance and experience.
– Business performance and the external

economic environment.

– Salary levels for similar roles at relevant

comparators.

– Salary increases across the Group.

Increases are applied in line with the outcome
of the review. There is no prescribed maximum.

Graham Clemett (CEO)
£494,090

Increases for Executive Board Directors will
typically be in line with those of the wider
workforce.

Dave Benson (CFO)
£340,000

Graham Clemett (CEO)
£503,970
(effective 1 April 2021)

Dave Benson (CFO)
£346,800
(effective 1 April 2021)

Pension
To provide market
competitive pensions.

Directors participate in a defined contribution
pension scheme or may receive a cash
allowance in lieu of pension contribution.

Up to 10% of salary.

For individuals with less than a year’s service
with Workspace, this will be 6% of salary.

Graham Clemett (CEO)
10% of salary.

Dave Benson (CFO)
6% of salary.

Dave Benson’s contribution
will increase to 10% of salary
to reflect one year’s service,
in line with our Policy.

Benefits
To provide market
competitive benefits.

Benefits typically include car allowance, private
health insurance, and death in service cover.
Where appropriate, other benefits may be
offered including, but not limited to, allowances
for relocation. In addition, Directors are eligible
to participate in all-employee share plans,
currently the SAYE and Share Incentive Plan.

Benefits may vary by role and individual
circumstance, and are reviewed periodically.

Includes car allowance,
private health insurance and
other benefits.

No change.

There is no overall maximum.

Include car allowance, private health insurance
and other benefits.

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REMUNERATION CONTINUED
OUR REMUNERATION POLICY CONTINUED

REMUNERATION POLICY TABLE CONTINUED

VARIABLE COMPONENTS OF EXECUTIVE PAY

PURPOSE AND LINK TO STRATEGY

OPERATION

OPPORTUNITY

PERFORMANCE METRICS

The maximum bonus potential
for Executive Board Directors
is 120% of salary p.a.

Annual bonus
To reinforce and reward
delivery of annual strategic
business priorities, based
on performance measures
relating to both Group and
individual performance.

Bonus deferral provides
alignment with Shareholder
interests.

A portion of the annual bonus
is deferred into shares for a
period of three years. The
deferral is 33% of bonus
earned.

Dividend equivalents may be
accrued on deferred shares.

The Committee may apply
malus and clawback in
circumstances of gross
misconduct, material
misstatement of the Group’s
results, an error in calculation,
serious reputational damage,
and corporate failure up to
the end of the deferral period.

Performance is measured
relative to financial,
operational, strategic and
individual objectives in
the year aligned with the
Company’s strategic plan.

Performance measures and
weightings are reviewed each
year to ensure they remain
appropriate and reinforce the
business strategy. At least
60% of the total bonus will be
based on financial measures.

Bonus awards are at the
Committee’s discretion and
the Committee will consider
the Company’s performance
in the round. The Committee
may override the formulaic
bonus outcome within the
limits of the plan where it
believes the outcome is not
reflective of performance,
to ensure fairness to both
shareholders and participants.

Contents

OPERATION IN THE YEAR ENDED
31 MARCH 2021 (2020/21)

OPERATION IN THE YEAR ENDING
31 MARCH 2022 (2021/22)

MAXIMUM OPPORTUNITY:
Graham Clemett (CEO)
Up to 120% of salary.

Dave Benson (CFO)
Up to 120% of salary.

– Trading profit (60%).
– Total Property Return (TPR)

(24%).

– Customer satisfaction (12%).
– Personal performance

(24%).

EXECUTIVE DIRECTORS AWARDED
BONUSES OF:
Graham Clemett (CEO)
39.5% of salary.

Dave Benson (CFO)
39.5% of salary.

Deferral of 33% of bonus
earned.

A discretionary 50% reduction
was applied to the formulaic
outturn.

See pages 187 to 190 for
further details on outcomes.

– No change to type of

performance conditions or
the respective weighting or
maximum bonus potential.

– The Committee is of the
opinion that, given the
commercial sensitivity
arising in relation to the
detailed financial targets
used for the annual bonus,
discussing precise targets
for the Annual Bonus plan
in advance would not be in
shareholder interests.

– Actual targets, performance
achieved and awards made
will be published at the
end of the financial year
so Shareholders can fully
assess the basis for any
pay-outs under the annual
bonus.

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REMUNERATION CONTINUED
OUR REMUNERATION POLICY CONTINUED

REMUNERATION POLICY TABLE CONTINUED

VARIABLE COMPONENTS OF EXECUTIVE PAY CONTINUED

PURPOSE AND LINK TO STRATEGY

OPERATION

OPPORTUNITY

PERFORMANCE METRICS

Normal maximum award of up
to 200% of salary per annum.

An award of 300% of salary
per annum may be made in
exceptional circumstances.

Awards will be based on a
combination of financial, share
price and strategic measures
aligned with the Company’s
strategic plan.

Contents

OPERATION IN THE YEAR ENDED
31 MARCH 2021 (2020/21)

OPERATION IN THE YEAR ENDING
31 MARCH 2022 (2021/22)

GRANT SIZES FOR:
Graham Clemett (CEO)
200% of salary.

Dave Benson (CFO)
200% of salary.

Long Term
Incentive Plan
(LTIP)
To reward and align to the
delivery of sustained long-
term sector outperformance
and to align the interests of
participants with those of
Shareholders.

The Committee may
grant annual awards of
Performance Shares which
vest after three years, subject
to performance conditions.
Vested shares are subject to
a further two-year holding
period. The Committee has
discretion to apply malus
and clawback to awards
(circumstances as listed in
the Annual Bonus row above)
up to the end of the holding
period.

Dividend equivalents may be
accrued on shares in respect
of the performance and
holding period.

No change to maximum
LTIP opportunities or the
performance conditions.

A performance underpin
will apply which allows
the Committee to reduce
vesting if performance is
inconsistent with the overall
performance of the business.
The Committee may, in the
context of the underlying
business strategy, use
different measures and/or
vary the weightings of the
measures. The Committee
would consult with major
shareholders prior to making
any significant changes.

PERFORMANCE CONDITIONS WERE:
– 50% Total Shareholder
Return (TSR) relative
to FTSE 350 property
companies.

– 50% Total Property Return

(TPR) versus IPD.

The 2018 LTIP vested in the
year at 0% of the award. See
page 191 for further details on
outcomes.

PURPOSE AND LINK TO STRATEGY

OPERATION

Shareholding
requirement

Shareholding guideline for Executive Directors of 200% of salary.

Post-cessation shareholding requirement of 200% of salary for two years post-departure. In the
event that a leaver has not met the relevant shareholding requirement at the point of cessation of
employment, they would be required to retain their full pre-cessation shareholding for the two-
year period.

CURRENT SHAREHOLDINGS*

CEO
208% of salary.

CFO
39% of salary.

* Based on a share price of £6.8176 being the average share price over the year to
31 March 2021 and salaries of £494,090 and £340,000 for Graham Clemett and
Dave Benson respectively.

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REMUNERATION CONTINUED
OUR REMUNERATION POLICY CONTINUED

Possible
payouts under
our Policy

Contents

SINGLE FIGURE SCENARIO
Graham Clemett, CEO

SINGLE FIGURE SCENARIO
Dave Benson, CFO

Based on our Remuneration Policy approved
by shareholders in 2020, we set out to the right
scenarios for the potential remuneration to be
earned by our Executive Directors under the
Policy for various performance assumptions.

Salary
Pension
Benefits
Annual bonus

A high proportion of the Executive Board
Directors packages are made up of shares,
supporting the alignment of Executive pay
with the interests of our shareholders. The
increased value in remuneration from share
price appreciation is beneficial for both
Executive Directors and shareholders.

LTIP

Salary as at 1 April 2021.
Current contribution rate of 10% of salary.
As provided in the single figure table on page 176.
Minimum – no bonus payable;
On-target – 50% of maximum potential bonus;
Maximum – maximum potential bonus.
Minimum – no LTIP vesting;
On-target – 20% of maximum (threshold vesting);
Maximum – maximum LTIP vesting.

Salary
Pension
Benefits
Annual bonus

LTIP

Salary as at 1 April 2021.
Current contribution rate of 10% of salary.
As provided in the single figure table on page 177.
Minimum – no bonus payable;
On-target – 50% of maximum potential bonus;
Maximum – maximum potential bonus.
Minimum – no LTIP vesting;
On-target – 20% of maximum (threshold vesting);
Maximum – maximum LTIP vesting.

Share price growth Impact of 50% share price appreciation over three

years (on the LTIP).

£000S

500

1,000

1,500

2,000

2,500

3,000

£000S

500

1,000

1,500

2,000

2,500

FIXED PAY

ON-TARGET

MAXIMUM

FIXED PAY

ON-TARGET

MAXIMUM

MAXIMUM WITH 50% SHARE
PRICE APPRECIATION

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REMUNERATION CONTINUED

Annual report on remuneration

Contents

What we paid
our Directors
in 2020/21

Source of data: Publicly available data in annual reports

TOTAL TARGET COMPENSATION
COMPARED TO OUR PEERS

OUR SHAREHOLDING REQUIREMENTS

Chart A below shows the
relative position of target total
compensation for our Executive
Directors compared to our peers.
When we set the target total
compensation for the Executive
Directors, one of the factors
the Committee considers is
the competitive market for our

Executive Directors, which we
believe is the FTSE 250 and FTSE
350 Real Estate Sector, and the
size of the Company compared
to these peers. The Committee
has been pleased to report above
target performance against
market benchmark has been
achieved over recent years.

Our Executive Directors are
encouraged to hold a high
number of shares in order to align
their interests to those of the
Shareholders, and to encourage a
long-term view of the sustainable
performance of the Company.

As such, our Directors are
impacted by the share price over
the year in the same way as our
Shareholders.

Chart B below shows that, in the
year, the CEO met his minimum
shareholding requirements. The
CFO joined in April 2020 and is
building his shareholding.

CHART A (i)
GRAHAM CLEMETT –
CHIEF EXECUTIVE OFFICER

Positioning of total remuneration of the

Company relative to market benchmarks.

CHART B
OUR SHAREHOLDING
REQUIREMENT HAS BEEN MET

Owned outright or vested.
Unvested and not subject to performance.
Subject to performance.

FTSE 350
REAL ESTATE

FTSE 250

BOTTOM
QUARTILE

THIRD
QUARTILE

SECOND
QUARTILE

TOP
QUARTILE

CHART A (ii)
DAVE BENSON –
CHIEF FINANCIAL OFFICER

FTSE 350
REAL ESTATE

FTSE 250

BOTTOM
QUARTILE

THIRD
QUARTILE

SECOND
QUARTILE

TOP
QUARTILE

CEO

CFO

% OF
SALARY

100%

200%

300%

400%

500%

600%

MINIMUM
SHAREHOLDING
REQUIREMENT

Based on a share price of £6.8176 being the average share price over the year to 31 March 2021
and salaries of £494,090 and £340,000 for Graham Clemett and Dave Benson respectively.

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Contents

Our approach
to fairness and
wider workforce
considerations

When making remuneration decisions for the
Executive Board Directors, the Committee
considers pay, policies and practices elsewhere
in the Group.

We receive regular updates from the Executive
Board Directors, and we monitor bonus payout
and share award data.

In this section, we provide context to our
Executive Board Director remuneration by
explaining our employee policies and our
approach to fairness, as well as the ratio of
CEO pay to that of the wider workforce.

Communication and engagement with
employees
The Board are committed to an open dialogue
with our employees over various decisions.
This year, our Chairman, Stephen Hubbard,
assumed the role of designated Non-Executive
Director responsible for overseeing employee
engagement. During the last financial year,
employees have been informed about activities,
performance and the Company’s response to
Covid-19 through staff briefings held by the
CEO and other members of the Executive
Team. Mr Hubbard also held three informal staff
events during the year. Employees are kept
informed about activities and performance

not only through these briefings but also by
the circulation of corporate announcements
and other relevant information to all staff,
supplemented by updates on the intranet.

Share schemes
Share schemes are a long-established and
successful part of our total reward package,
encouraging and supporting employee share
ownership. In particular, all employees are
invited to participate in the Company’s Savings
Related Share Option Scheme and the Share
Incentive Plan.

Equal opportunities
Workspace is committed to an active Equal
Opportunities Policy from recruitment and
selection, through training and development
and in performance reviews, promotion
and remuneration. All decisions relating to
employment practices are objective, free from
bias and based solely upon work criteria and
individual merit. We consider the needs of all
employees, customers and the community.

We use everyone’s talents and abilities, and
we value diversity. The Company aims to make
our promotion and recruitment practices fair
and objective. We encourage continuous
development and training, as well as the
provision of equal opportunities and career
development for employees. Further details of
this are shown on pages 145 and 200.

Retirement benefits
The Company provides pension benefits for
the majority of its employees. The Company’s
commitment to pension contributions,
consistent with the last year, ranges from 6% to
10% of an employee’s salary.

The year-on-year change in our
Directors’ remuneration

The table below sets out the changes year-on-
year between our Director pay and average
employee pay. As per our Policy, salary
increases applied to Executive Directors will
typically be in line with those of the wider
workforce.

TABLE B

Director

Executive directors
Graham Clemett
Dave Benson1
Non-Executive directors
Stephen Hubbard2
Maria Moloney
Chris Girling
Damon Russell
Suzi Williams
Rosie Shapland3
Lesley-Ann Nash3
Daniel Kitchen4
Ishbel Macpherson4
All other employees

Table B below shows the percentage change
in each Directors’ remuneration, comprising
salary/fees, taxable benefits and annual
bonus, and comparable data for the average
of employees within the Company. The
comparator group is based on all employees
(excluding Directors), normalised for joiners and
leavers during the year. The average number of
people employed by the Company during the
year was 223 (2020: 232). All employees are
eligible for consideration for an annual bonus.

Salary/
Fees

Taxable
benefits

Annual
variable

9%
n/a

198%
-4%
0%
10%
5%
n/a
n/a
0%
0%
5%

-15%
n/a

-54%
n/a

n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
-5%

–
–
–
–
–
–
–
–
–
-5%

1. Dave Benson joined the Board as Chief Financial Officer on 1 April 2020 therefore the year-on-year change in remuneration

cannot be stated.

The Pension Scheme is open to every
employee in accordance with the new
Government auto-enrolment rules.

2. Stephen Hubbard was appointed as Chairman in July 2020. Please see page 194.
3. Rosie Shapland and Lesley-Ann Nash joined the Board as Non-Executive Directors on 6 November 2020 and 1 January 2021

respectively therefore the year-on-year change in remuneration cannot be stated.

4. Daniel Kitchen and Ishbel Macpherson stepped down from the Board on 9 July 2020 and 24 July 2020 respectively therefore the

above information has been annualised as per their time in role.

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600

500

400

300

200

100

184

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ANNUAL REPORT ON REMUNERATION CONTINUED

Pay comparisons

Chart C shows the single figure of
remuneration for our CEO over time, and the
pay of our average employee, each rebased
to 2011. We have also included our TSR
performance over this period.

CEO single figure
Workspace Group plc TSR
FTSE250 Index
FTSE350 Real Estate Supersector Index

TABLE C

CEO single figure of total remuneration £000
Graham Clemett1
Jamie Hopkins2
Harry Platt3
Annual bonus pay-out
Graham Clemett (% of maximum opportunity)
Jamie Hopkins (% of maximum opportunity)
Harry Platt (% of maximum opportunity)
LTIP vesting
Graham Clemett (% of maximum opportunity)
Jamie Hopkins (% of maximum opportunity)
Harry Platt (% of maximum opportunity)
Ratio of single total
remuneration figure shown
to employees as a whole

to employee lower quartile4
to employee median
to employee upper quartile4

Contents

31 Mar 2012
–
27.4
1,359.6

31 Mar 2013
–
960.3
–

31 Mar 2014
–
966.9
–

31 Mar 2015
–
3,533.1
–

31 Mar 2016
–
2,262.7
–

31 Mar 2017
–
2,205.6
–

31 Mar 2018
–
1,674.2
–

31 Mar 2019 31 Mar 2020
1,341.9
490.9
–

–
1,728.2
–

31 Mar 2021
764.4
–
–

–
–
75%

–
–
66.5%
–
–
–

–
100%
–

–
97.8%
–

–
–
–
–
–
–

–
–
–
–
34x
–

–
97.2%
–

–
100%
–
–
128x
–

–
95.3%
–

–
100%
–
–
79x
–

–
100%
–

–
88.7%
–
–
72x
–

–
100%
–

–
62.7%
–
–
48x
–

–
95.8%
–

–
50.7%

53x
33x
23x

77.96%
–
–

87.24%
87.24%
–
47x
43x
23x

33%
–
–

0%
–
–
23x
15x
11x

1. Mr Clemett assumed the role of Interim CEO on 1 June 2019 and was appointed CEO on 24 September 2019.
2. Mr Hopkins was appointed as an Executive Director on 12 March 2012 and stepped down from the Board on 31 May 2019.
3. Mr Platt retired as an Executive Director of the Company on 31 March 2012.
4. See below for details on calculation.

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PAY COMPARISONS CONTINUED

Despite the fact that Workspace would not
be required to disclose the ratio of CEO pay
to workforce pay (given we do not meet the
requirement regarding employee numbers), the
Committee have chosen once again to disclose
this ratio on a variety of bases, as shown at
the bottom of table C shown above. For the
2019, 2020 and 2021 figures, this is based on
the Companies (Miscellaneous Reporting)
Regulations 2018. For the historic figures, this
is based on our own methodology. In all cases,
the entire UK workforce is included.

Chart C demonstrates that there continues
to be a strong correlation between our CEO
pay and the Total Shareholder Return of the
Company. This results from the CEO receiving
a high proportion of his remuneration in
shares and because the variable pay within
his package is based on measures which
directly support the implementation of our
strategy. The chart also shows that our average
employee pay has trended upwards over this
period.

Table C sets out the ratio of CEO pay (based
on the single figure) to that of the workforce,
for the last eight years, at the bottom of the
table. There is significant volatility in this ratio,
caused by the following:
– Our CEO pay was made up of a higher

proportion of incentive pay than that of
our employees, in line with shareholder
expectations. This introduces a higher
degree of variability in his pay each year
versus that of our employees.

– Long-term incentives, which made up a
significant proportion of our CEO’s pay,
are provided in shares, and their value on
vesting, included in his single figure, reflects
the movement in share price over the three
years prior to vesting. This outcome can add
significant volatility to the CEO’s pay and this
is reflected in the ratio.

The ratio is driven by the different structure
of the pay of our CEO versus that of our
employees, as well as the make-up of
our workforce. This ratio varies between
businesses even in the same sector.

What is important from our perspective is that
this ratio is influenced only by the differences
in structure, and not by divergence in fixed pay
between the CEO and wider workforce.

Contents

The 2019, 2020 and 2021 figures above
were calculated based on the Companies
(Miscellaneous Reporting) Regulations
2018. These regulations, which set out how
to calculate the pay ratio, describe three
methodologies that can be used to identify the
employees whose pay sits at the lower quartile,
upper quartile and median of the Company –
these are named in the regulations as ‘Options
A, B or C’. In 2019 and 2020, Workspace used
Option B, the gender pay data, to determine
these individuals, and the ratio of their pay to
the CEO is set out in table C above. For 2021,
Option A was used.

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ANNUAL REPORT ON REMUNERATION CONTINUED

Single total figure
of remuneration
for the Executive
Directors (audited)

The illustrations to the right set out a
single figure for the total remuneration
received by each Executive Board
Director for the year ended 31 March
2021 and the prior year.

1. Pension: During 2020/21 each of Messrs Clemett
and Benson received a cash allowance in lieu of
pension contribution.

2. Benefits: Taxable value of benefits received in
the year by Executive Directors includes a car
allowance, private health insurance and death in
service cover.

3. Annual bonus: This is the total bonus earned

in respect of performance during the relevant
year. For 2019/20 and 2020/21, the Committee
set a minimum deferral requirement of 33% of
the bonus earned. For 2020/21, this deferral was
equivalent to £64,404 for Mr Clemett and £44,319
for Mr Benson.

4. LTIP: The 2020/21 figure includes the estimated
value of 0% of the 2018 LTIP shares that vested
based on performance to 31 March 2021. The share
price used is the three-month average to 31 March
2021 of £7.5606. The 2019/20 figures have been
updated to reflect the share price on the date of
the vesting on 20 July 2020 of £5.8451.

Graham Clemett assumed the role of interim CEO
on 1 June 2019 and on 24 September 2019 was
appointed CEO. Dave Benson joined Workspace as
CFO on 1 April 2020.

Graham Clemett, CEO

FIXED PAY

SALARY

PENSION1

BENEFITS2

VARIABLE PAY

ANNUAL BONUS3

LTIP4

OTHER – SAYE, SIP

TOTAL
OF WHICH SHARE
PRICE GROWTH

0.0

Dave Benson, CFO

FIXED PAY

SALARY

PENSION1

BENEFITS2

VARIABLE PAY

ANNUAL BONUS3

LTIP4

OTHER – SAYE, SIP

TOTAL
OF WHICH SHARE
PRICE GROWTH

0.0

764.4

Contents

764.4

2020/21
£000

494.0

49.4

21.4

195.1

NIL

4.5

764.4
0

2020/21
£000

340.0

18.0

134.3

NIL

7.5

499.8
0

2019/20
£000

452.4

51.7

25.1

423.2

385.3

4.2

1,341.9
175.5

2019/20
£000

n/a

n/a
n/a

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Contents

Annual bonus
payout in respect
of 2020/21
(audited)

For 2020/21 the maximum bonus opportunity
for the Executive Directors was 120% of
salary. Payouts are subject to the assessment
of performance against stretching financial,
strategic and personal performance targets,
and are calculated on a straight-line basis
from 0% at threshold to 100% at maximum
performance. Both Graham Clemett and
Dave Benson are required to defer 33% of
their bonus into Company shares for three
years. The targets are set based on our
budgeting process, which takes account of
market expectation, planned acquisitions and
disposals of assets, and aspirations around
Company growth.

The performance measures, targets and
outcomes for each measure are shown in the
table to the right.

The Committee considered at length the
experience of shareholders over this year,
particularly in the context of the Covid-19
pandemic, balanced against the need to
appropriately recognise the achievement of the
management team. For further detail on the
Committee’s discussions see page 170.

ANNUAL BONUS PAYOUT IN RESPECT OF 2020/21

MEASURE

ACHIEVED

WEIGHTING
AS A % OF SALARY

60%

24%

12%

24%

TRADING PROFIT
AFTER INTEREST

THRESHOLD
(0% PAYABLE)

£34.6M

TOTAL PROPERTY RETURN
From portfolio versus
a defined comparator
Benchmark compiled by IPD

BENCHMARK

CUSTOMER SATISFACTION

72%

PERSONAL PERFORMANCE

TOTAL

OUTCOME (£000)
GRAHAM CLEMETT, CEO

OUTCOME (£000)
DAVE BENSON, CFO

MAXIMUM
(100% PAYABLE)

FORMULAIC OUTTURN AND
OPPORTUNITY AS A % OF SALARY

£38.6M

60%

ACTUAL: £38.7M

BENCHMARK +2%

ACTUAL: BENCHMARK -3.78%

80%

ACTUAL: N/A

MAX: 100%

19%

ACTUAL: 80%

60%

24%

12%

24%

79%

120%

£390.2
DISCRETIONARY 50%
REDUCTION APPLIED
TO OUTTURN

£195.1

TOTAL BONUS

£268.6
DISCRETIONARY 50%
REDUCTION APPLIED
TO OUTTURN

£134.3

TOTAL BONUS

£64.4

OF WHICH IS
DEFERRED
BONUS

£44.3

OF WHICH IS
DEFERRED
BONUS

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ANNUAL REPORT ON REMUNERATION CONTINUED

Personal objectives 2020/21

The Executive Directors’
personal objectives focus on
the delivery of the strategic
priorities for the business and
the successful management
of risk. Based on a review of
achievement against the
personal objectives set out
below, the Committee has
awarded Graham Clemett
and Dave Benson 19% of
salary under this element.

Contents

– Issuance of first green bond in connection with
the Company’s new green finance framework,
in line with our ESG strategy and our recently
published net zero carbon pathway.

KEY HIGHLIGHTS FROM THE YEAR:

– Published our net zero carbon pathway,

including a commitment to reduce operational
and embodied carbon emissions in line with our
approved science based targets to become a
net zero carbon business by 2030.

– Roll out of new brand positioning both internally
and externally including launch of marketing
campaign in 2021.

– Expansion of our property portfolio which
includes planning consent achieved at
Kennington Park for additional 200,000 sq ft of
office space.

PERSONAL PERFORMANCE

24%

19%

Opportunity
(% of salary)

Outcome
(% of salary)

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Contents

PERSONAL OBJECTIVES 2020/21 CONTINUED

OBJECTIVE

TARGETS

ACHIEVEMENTS

APPROPRIATE RESPONSE TO THE
COVID-19 PANDEMIC

– Maintain contact with customers and

– 50% rent reduction offered to all business centre customers for the first quarter of year to

respond sympathetically to their issues and
concerns.

30 June 2020.

– Centre teams maintained regular contact with all customers (both direct and virtually) to

– Maintain engagement and motivation of

understand and address issues and concerns where possible.

employees working remotely.

– Asset management team engaged with customers to ‘right size’ their requirements where

– Ensure appropriate measures in place for the
safe return to work of both customers and
staff.

possible.

– Extreme customer hardship situations addressed on a case by case basis by CEO and asset

management team.

– 4 virtual town meetings held by the CEO and Exec team with staff through the year, together

with regular updates on work plans as Covid-19 restrictions evolved.

– Remote working capability including PCs provided to all staff working from home. Training

provided for full-use of Teams for on-line meetings, chat and calls.

– Detailed Covid-safe measures and procedures implemented at all business centres and head
office. Regular risk assessments conducted and any changes in recommended measures
monitored and implemented as appropriate.

DEVELOP OUR BRAND PROPOSITION

LAUNCH NEW CUSTOMER WEBSITE

DEVELOPMENT OF A CUSTOMER APP

– Deliver a compelling brand proposition that
sets us apart from the market and resonates
with customers and our people.

– Full review of the Company’s existing brand and market position completed and new brand

positioning strategy developed.

– Roll-out out of new brand positioning both internally and externally including launch of

– Deepen customer insight to improve

advertising campaign in May 2021.

communications and hone our operational
activities.

– Conducted workshops for the entire business to remind employees of our brand responsibility

and ran refreshed tone of voice workshops.

– Develop new customer propositions that

– Customer journey workshops completed to identify opportunities to improve customer

enhance brand experience.

satisfaction.

EXPAND OUR PROPERTY PORTFOLIO

– Deliver on, and look to extend, our

refurbishment and redevelopment pipeline

– Monitor the market for appropriate

acquisition opportunities.

– Complete on acquisitions and disposals that
meet or exceed our return requirements.

– Additional customer insight workshops completed to support change programme now

underway to address priority issues.

– Upgraded Workspace marketing website launched December 2020 with added functionality

and much improved user experience.

– Customer mobile app development completed and now in beta testing. Roll-out to be co-

ordinated with deployment of new centre access system.

– Opened two new business centres in Summer 2020.
– One refurbishment and two redevelopments completed and expected to open Summer 2021.
– Achieved planning consent for significant mixed-use redevelopment project in Wandsworth.
– Planning consent achieved at Kennington Park for additional 200,000sq ft of office space.
– Detailed due diligence undertaken (and ongoing) on a range of acquisition opportunities,

although none completed in year, with rigorous return requirements maintained.

– Disposal of Bow Exchange completed for £11m.

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Contents

PERSONAL OBJECTIVES 2020/21 CONTINUED

OBJECTIVE

TARGETS

ACHIEVEMENTS

PROGRESS OUR ESG AGENDA

– Determine and publish our net zero carbon

– Committed to becoming a net zero carbon business by 2030. Detailed pathway and approved

pathway.

science-based targets published in January 2021.

– Increase the number of our business centre

environment groups.

– Published Green Finance Framework in March 2021 in support of green bond.
– Environment groups established with customers at three centres with a further three planned as

– Progress our diversity and inclusion plans for

customers return to their offices.

recruitment and appraisals.

– Diversity and inclusion training completed for all staff and appropriate new recruitment

– Programme of local community and charity

processes implemented.

initiatives.

– Interview skills training completed for all managers.
– Worked with our customers to support disadvantaged young people in London, offering CV

workshops, interview practice and work experience placements.

ENSURE WE HAVE APPROPRIATE
FINANCING TO SUPPORT OUR PLANS

– Extend debt maturity profile.
– Investigate and secure as required new

IMPROVE EMPLOYEE ENGAGEMENT

DEVELOP NEW BUSINESS
OPPORTUNITIES

sources of funding.

– Maintain conservative gearing levels and

covenant headroom.

– Extend breadth of training and development
including delivery of new customer service
programme.

– Continued roll-out of wellness initiatives.
– Launch employee of the month award.

– Debut green bond (maturing in 2028) for £300m issued in March 2021.
– Maturity of £160m of revolver facilities extended by one year to June 2023.
– BBB Investment credit rating retained.
– Low LTV maintained (24% at 31 March 2021) with significant headroom on all covenants.

– Introduced new three-day induction programme for all starters.
– 120 training sessions delivered to staff.
– Rolling schedule of wellness webinars and wellbeing events delivered
– “Workspace Winners” quarterly awards recognising employee achievement launched in June

2020.

– “Health Shield” benefit package launched for all staff.

– Expand meeting room footprint.
– Assess opportunities for further roll-out of
furnished office and single billing offering.

– Meeting room expansion plans delayed to 21/22 by Covid-19.
– Club Workspace viability reviewed and decision made to close all sites and repurpose space for

other opportunities.

– Extend and bring to scale our events

– Roll out of new team rooms offer (furnished, short-term space) progressed with new team

programme.

rooms opened across 9 centres.

– Established new in-house catering capability to be initially rolled out at two centres.
– Single-billing assessment completed and project team established for roll-out in 21/22.

TECHNOLOGY SUPPORT AND SECURITY

– Review resilience service levels and investment

plans with our technology partners.

– Maintain high level of cyber security awareness

and testing.

– Ensure high quality and reliable remote

working capabilities in place.

– Cyber maturity assessment completed.
– VPN capability rolled-out to enable secure home working for all staff.
– Business continuity management plans assessed by external advisers to ensure fit for purpose.
– Regular cyber awareness testing and training for all staff.
– Online data protection training completed by all staff.

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Contents

LTIP award vesting in respect
of 2020/21 (audited)

LTIP awards made during
the 2020/21 financial year

The 2018 LTIP awards measured performance
over the period 1 April 2018 to 31 March
2021. Details of the performance targets and
achievement against them are set out below.

The 2019 LTIP awards are based on the same
targets and weightings as the 2020 LTIP award
shown below, in Table E, measured over the
period 1 April 2019 to 31 March 2022.

Under the current Policy conditional share awards under the LTIP are granted to a maximum of
200% of salary. Awards under the 2020 LTIP are subject to the performance conditions detailed
in the table below measured over the period 1 April 2020 to 31 March 2023.

The Committee considered performance set
out with the underlying business performance
of Workspace and concluded that 0% of the
2018 LTIP award should vest.

TABLE E

Threshold3 (20% vesting)
Maximum3 (100% vesting)

Relative TSR vs.
sector group1
(50% of the award)
Median
Upper Quartile

Total Property Return
versus London IPD index
(50% of the award)
Median
Upper Quartile

1. The comparator group for the 2020 LTIP cycle is the constituents of the FTSE 350 Real Estate Index excluding agencies.
2. For any shares to vest on absolute TSR, the Company’s TSR outcome must exceed the median TSR of the comparator group

over the performance period.

3. There is straight-line vesting between the ‘Threshold’ and ‘Maximum’ performance levels.

WEIGHTING

MEASURE

THRESHOLD

MAXIMUM

PAYOUT AS % MAXIMUM

The following awards were granted during the year under the 2020 LTIP:

50%

RELATIVE TSR VS.
SECTOR GROUP

MEDIAN

UPPER QUARTILE

ACTUAL: 37TH PERCENTILE

TOTAL PROPERTY RETURN
VERSUS LONDON IPD INDEX

MEDIAN

UPPER QUARTILE

ACTUAL: 43RD PERCENTILE

NUMBER OF SHARES VESTING
(AUDITED)

VALUE OF SHARES VESTING

NIL

£0

Graham Clemett
Dave Benson

Performance Share award

Date of grant
18 June 2020
18 June 2020

Market price at
date of award1
£7.0767
£7.0767

Number of
shares
139,638
96,089

Face value

£
988,176
679,993

% of salary
200%
200%

1. The share price for calculating the levels of awards was £7.0767 the average mid-market closing price over the three dealing

days 15, 16 and 17 June 2020, in accordance with the LTIP plan rules.

Deferred shares were granted (as conditional share awards) under the 2019/20 bonus of 20,315
shares to Mr Clemett on 26 June 2020 based on a share price of £6.82p.

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REMUNERATION CONTINUED
ANNUAL REPORT ON REMUNERATION CONTINUED

Contents

How we will apply the Policy in 2021/22

We believe that the Policy continues to be fit for purpose going forward, and therefore the Committee is not
proposing to make any changes for 2021/2022.

BASE SALARY

ANNUAL BONUS

The Executive Directors will be awarded a 2% salary
increase in line with the average applied to the wider
workforce. Salaries will be as follows:

There is no change to the annual bonus maximum
potential in 2021/22, and this will continue to be
120% of salary.

33% of the total bonus paid will be deferred into
shares for three years. Dividend equivalents may
be accrued on deferred shares.

CEO

£503,970

CFO

£346,800

PERFORMANCE MEASURES

60%

OF SALARY

24%

OF SALARY

LINKED TO

LINK TO STRATEGY

LINKED TO

LINK TO STRATEGY

Trading profit after
interest

Customer-led growth
Operational excellence

Total Property Return
(TPR)

Doing the Right Thing

BENEFITS AND PENSION

In line with the Policy set out in this report, the
Executive Directors will receive a contribution to a
defined contribution plan or a cash allowance in lieu
of contribution of 10% of salary.

24%

OF SALARY

12%

OF SALARY

LINKED TO

LINK TO STRATEGY

LINKED TO

LINK TO STRATEGY

Personal performance

Operational excellence

Customer satisfaction

Customer-led growth

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Contents

REMUNERATION CONTINUED
ANNUAL REPORT ON REMUNERATION CONTINUED

HOW WE WILL APPLY THE POLICY IN 2021/22 CONTINUED

ANNUAL BONUS CONTINUED

LONG-TERM INCENTIVE PLAN (LTIP)

Whilst we believe that disclosing the exact performance conditions and targets for all measures
including the personal performance would not be in the best interests of shareholders, we
remain committed to best practice disclosure. We therefore set out below some examples of the
objectives that the Committee will consider in respect of evaluating personal performance. Full
disclosure on the targets, performance achieved and resulting bonus payouts for 2021/22 will be
provided in next year’s report.

Executive Personal Objectives 2021/22

EXAMPLES OF EXECUTIVE PERSONAL OBJECTIVES 2021/22
1. Launch new brand positioning and raise brand and corporate profile
2. Roll-out of single-billing lease product
3. Progress the delivery of our multi-year ESG plans and commitments
4. Continued upgrade and expansion of our property portfolio
5. Delivery of customer service initiatives from our customer journey project

Maximum award 200% of salary. The performance measures are such that 50% will be based on
Total Property Return against a London focused IPD index and 50% will be based on relative TSR
against FTSE 350 Real Estate companies. The targets for the two elements are as follows:

Threshold vesting (20% of maximum)
Maximum vesting (100% of maximum)

Total Shareholder Return
relative to FTSE 350 Real
Estate Supersector index
excluding agencies
Median
Upper quartile

Total Property Return
versus London focused
IPD index
Median
Upper quartile

A holding period of two years will apply to any vested shares under the LTIP.

To allow any payouts to be fully reflective of underlying performance, the LTIP underpin allows the
Committee to reduce vesting should the Committee believe that the relative TSR and/or relative
TPR performance is inconsistent with the overall performance of the business.

NON-EXECUTIVE DIRECTOR FEES

The fees for Non-Executive Directors are reviewed and agreed annually. The fees, which are
effective from 1 April 2021, are set out in the table below.

Chairman
NED base fee
Chair of Audit Committee fee
Chair of Remuneration Committee fee
Chair of Risk Committee1
Senior Independent Director fee2

1. Chairman of Risk Committee appointed in September 2020.
2. Fee to apply from 22 July 2021.

2021 fee
£188,451
£51,000
£10,800
£10,800
£10,800
£10,800

2020 fee
£188,451
£51,000
£10,800
£10,800
n/a
n/a

% change
0%
0%
0%
0%
n/a
n/a

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REMUNERATION CONTINUED
ANNUAL REPORT ON REMUNERATION CONTINUED

Contents

Single figure for Non-Executive Directors (audited)

Table F below sets out a single figure for the total remuneration received by each Non-Executive Director for the year ended 31 March 2021 and the prior year:

TABLE F

Non-Executive Director
Base fee
Additional fees
Total

Stephen Hubbard

Maria Moloney

Chris Girling

Damon Russell

Suzi Williams

Rosie Shapland

Lesley-Ann Nash

Daniel Kitchen

Ishbel Macpherson

2020/21
£000
151.9
–
151.9

2019/20
£000
51.0
–
51.0

2020/21
£000
51.0
8.3
59.3

2019/20
£000
51.0
10.8
61.8

2020/21
£000
51.0
10.8
61.8

2019/20
£000
51.0
10.8
61.8

2020/21
£000
51.0
5.0
56.0

2019/20
£000
51.0
–
51.0

2020/21
£000
51.0
2.4
53.4

2019/20
£000
10.2
–
10.2

2020/21
£000
19.9
–
19.9

2019/20
£000
–
–

2020/21
£000
12.8
–
12.8

2019/20
£000
–
–
–

2020/21
£000
52.2
–
52.2

2019/20
£000
188.5
–
188.5

2020/21
£000
16.3
–
16.3

2019/20
£000
51.0
–
51.0

1. Expenses incurred by Non-Executive Directors represent the cost to the Group, being gross of taxation. In 2020/21, Maria Moloney and Chris Girling were reimbursed for out of pocket expenses, incurred in attending meetings in connection with the discharge of

their duties, of £1,841 and £850 respectively.

2. Stephen Hubbard was appointed Chairman in July 2020. Maria Moloney stepped down as Chair of the Remuneration Committee, with Suzi Williams assuming this role also with effect form 1 January 2021. Damon Russell assumed the role of Chairman of the Risk
Committee with effect from September 2020. Rosie Shapland and Lesley-Ann Nash were appointed as Directors with effect from 6 November 2020 and 1 January 2021 respectively. Additional fees are paid to Non-Executive Directors serving as chairs of the
Remuneration, Audit and Risk Committees.

Share ownership and share interests (audited)

The shareholding guideline for Executive Directors is 200% of
salary. The table to the right below shows the interests of the
Directors and connected persons in shares (owned outright
or vested). There have been no changes in the interests in the
period between 31 March 2021 and 2 June 2021.

Graham Clemett exceeds the shareholding guidelines.
See page 182 for details. Dave Benson who joined the Company
on 1 April 2020 acquired 19,850 shares in September 2020.

1. Daniel Kitchen and Ishbel Macpherson stepped down from the Board on 9 July
2020 and 24 July 2020 respectively. As at the date of leaving, the number of
shares held were 40,805 for Mr Kitchen and 3,150 for Ms Macpherson.

TABLE G

Chairman
Stephen Hubbard
Executive Directors
Graham Clemett
Dave Benson
Non-Executive Directors
Maria Moloney
Chris Girling
Damon Russell
Suzi Williams
Rosie Shapland
Lesley-Ann Nash
Past Directors
Daniel Kitchen1
Ishbel Macpherson1

31 March

2021

31 March

2020

23,640

15,290

129,448
19,850

2,027
NIL
NIL
NIL
NIL
NIL

See note
See note

92,785
n/a

2,027
NIL
NIL
NIL
n/a
n/a

40,805
3,150

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REMUNERATION CONTINUED
ANNUAL REPORT ON REMUNERATION CONTINUED

SHARE OWNERSHIP AND SHARE INTERESTS (AUDITED) CONTINUED

Table H below shows the Executive Directors’ interest in shares.

TABLE H

Executive Director
Graham Clemett4

Dave Benson

Type
Shares
Market value options1
Shares
Market value options1

Owned
outright
or vested2
129,448
NIL
19,850
NIL

Unvested and
not subject to
performance3
43,792
3,389
NIL
5,649

Subject to
performance4
211,452
NIL
96,089
NIL

Total
384,692
3,389
115,939
5,649

1. Market value options include SAYE options outstanding and not yet matured as at 31 March 2021. The exercise price of

these was set at 80% (in accordance with HMRC and the plan rules) of the market value of a share at the invitation date.
See page 197 for further details.

2. The total shares owned outright or vested.
3. This figure includes the deferred bonus shares awarded in 2018, 2019 and 2020 for Mr Clemett.
4. The interest in shares of 211,452 for Mr Clemett consist of LTIP awards made in 2019 and 2020. The interest in shares of 96,089

for Mr Benson consist of LTIP awards made in 2020, details of which can be found on page 191 in this report.

Contents

Additional information

External appointments
It is the Board’s policy to allow Executive Directors to take up one Non-Executive position on the
Board of another company, subject to the prior approval of the Board. Any fee earned in relation
to outside appointments is retained by the Executive Director. Mr Clemett was appointed a Non-
Executive Director and Chairman of the Audit Committee of The Restaurant Group plc, effective
1 June 2016. Mr Clemett was paid in the year a fee of £53,000. Mr Benson does not hold any
external appointments.

Relative importance of spend on pay
Chart D below shows the Company’s actual expenditure on shareholder distributions (including
dividends and share buybacks) and total employee pay expenditure for the financial years ended
31 March 2020 and 31 March 2021.

CHART D
EMPLOYEE REMUNERATION

2021

2020

DISTRIBUTION TO SHAREHOLDERS

£21.7M

2021

£32.1M

£20.4M

2020

£65.4M

+6%

-51%

The estimated total dividend as reported in the financial statements for the year to 31 March 2021 was £32.1m.

Payments for loss of office (audited)
None.

Payments to past Directors (audited)
Jamie Hopkins, who stepped down from the Board on 31 May 2019, received 58,379 shares
which vested on 20 July 2020 in respect of the 2017 LTIP. Full details of Mr Hopkins’ termination
arrangements were set out in the 2019 Remuneration Report.

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REMUNERATION CONTINUED
ANNUAL REPORT ON REMUNERATION CONTINUED

ADDITIONAL INFORMATION CONTINUED

Service contracts of Directors serving in the year
Executive Directors are employed under contracts of employment with Workspace Group PLC.
The principal terms of the Executive Directors’ service contracts are as follows.

Executive Director
Graham Clemett
David Benson

Position
Chief Executive Officer 31 July 2007
1 April 2020
Chief Financial Officer

Effective date of contract

From Company
12 months
12 months

From Director
12 months
12 months

Notice period

Graham Clemett joined the Company as CFO in July 2007 and was appointed as CEO
on 24 September 2019. Graham served as Interim CEO and CFO from 31 May 2019 until
September 2019.

The Chairman and Non-Executive Directors have letters of appointment. Dates of the Directors’
letters of appointment are set out below:

Name
Stephen Hubbard
Maria Moloney
Chris Girling
Damon Russell
Suzi Williams
Rosie Shapland
Lesley-Ann Nash

Date of original appointment
(date of reappointment)
16 July 2014 (23 January 2020)
22 May 2012 (22 May 2021)
7 February 2013 (7 February 2019)
29 May 2013 (29 May 2019)
21 January 2020 (n/a)
6 November 2020 (n/a)
1 January 2021 (n/a)

Date of appointment/
last reappointment at AGM Notice period
6 months
2020
3 months
2020
3 months
2020
3 months
2020
3 months
2020
3 months
n/a
3 months
n/a

1. Rosie Shapland and Lesley-Ann Nash joined the Board as Non-Executive Directors on 6 November 2020 and 1 January 2021

respectively. Both Rosie and Lesley-Ann are being proposed for election by shareholders at the forthcoming AGM
on 22 July 2021.

The Directors are subject to annual re-election at the AGM. Non-Executive Directors’ letters
of appointment and Executive Directors’ contracts are available to view at the Company’s
registered office.

Contents

Committee advisers
During the year, PwC LLP acted as independent adviser to the Committee. PwC LLP was
appointed by the Committee in 2018 following a selection process. PwC LLP is a founding member
of the Remuneration Consultants Group and voluntarily operates under the Code of Conduct in
relation to Executive remuneration consulting in the UK. The Committee is satisfied that the PwC
LLP engagement partner and team, which provide remuneration advice to the Committee, do not
have connections with the Group that may impair their objectivity and independence. The fees
charged by PwC LLP for the provision of independent advice to the Committee during the year
were £72,425.

With regards to other services provided by PwC during the financial year, PwC conducted a
review of the Group’s internal audit and risk requirements and provided support to Workspaces IT
team on cyber security.

Voting at the Company’s AGMs
The table below sets out the results of the most recent shareholder votes on the Policy Report
and the advisory vote on the 2019/20 Annual Report on Remuneration at the 2020 AGM on 9 July
2020. The Committee views this level of shareholder support as a strong endorsement of the
Company’s Policy and its implementation.

Policy Report (2020 AGM)
Annual Report on Remuneration
(2020 AGM)

Percentage of votes cast

Number of votes cast

For and
Discretion
99.54

Against

For and
Discretion
0.46 116,307,019

Against
539,870

Withheld1
1,666

91.36

8.64 106,751,974

10,094,915

1,666

1. A withheld vote is not a vote in law and is not counted in the calculation of the proportion of votes cast for and against a

resolution.

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REMUNERATION CONTINUED
ANNUAL REPORT ON REMUNERATION CONTINUED

ADDITIONAL INFORMATION CONTINUED

Share-based awards and dilution
The Company’s share schemes are funded through a combination of shares purchased in the
market and new-issue shares, as appropriate. The Company monitors the number of shares
issued under these schemes and their impact on dilution limits. The Company’s usage of shares
compared to the relevant dilution limits set by the Investment Association in respect of all shares
plans (10% in any rolling 10-year period) and Executive share plans (5% in any rolling 10-year
period) as at 31 March 2021 is detailed below.

As of 31 March 2021, around 3.2% and 2.7% shares have been, or may be, issued to settle awards
made in the previous 10 years in connection with all share schemes and executive share schemes
respectively. Awards that are made but then lapse or are forfeited are excluded from the
calculations.

Contents

Share options
The following table shows, for the Directors who served during the year, the interests in
outstanding awards under the HMRC-approved Savings Related Share Option Plan and SIP
Awards.

Graham Clemett

Granted
during
the year
–
–
3,389

Lapsed
during
the year
1,046
1,282
–

Vested
in year
–
–
–

At
01/04/2020
1,046
1,282
–
107
228
233

At
31/03/2021
–
–
3,389
107
228
233
5,649

Normal exercise date

Exercise
price
–
–

To
–
–
£5.31 01.09.23 01.03.24

From
–
–

18.09.18
30.08.20
05.09.22

£5.31 01.09.25 01.03.26

ALL SHARE PLANS

EXECUTIVE SHARE PLANS

Dave Benson

5,649

LIMIT

10%

LIMIT

5 September 2019 (233).

1. Mr Clemett was granted awards under the share incentive plan on 18 September 2015 (107); 30 August 2017 (228) and

ACTUAL

3.2%

ACTUAL

2.7%

There have been no changes in Directors’ interests over options in the period between the balance
sheet date and 2 June 2021. The Directors’ Remuneration Report has been approved by the Board
of Workspace Group PLC.

Outstanding LTIP awards
Details of current awards outstanding to Graham Clemett and Dave Benson are detailed below.

By order of the Board

Name

Graham Clemett
20/07/2017
22/06/2018
18/06/2019
18/06/2020
Dave Benson
18/06/2020

At 1 April 2020

Lapsed during the year Vested during the year

At 31 March 2021

Performance2

Performance

Suzi Williams
Chair of the Remuneration Committee
2 June 2021

65,863
54,892
71,814
–

(8,405)
–
–
–

57,458
–
–
–

–
54,892
71,814
139,638

–

96,089

1. Awards will vest subject to the satisfaction of performance conditions detailed on page 193 over the three year performance

period.

2. LTIP Awards made to the Executive Directors. In July 2017 awards were in respect of 200% of salary based on a share price
at date of award of £8.9033. In June 2018, 2019 and 2020 awards were in respect of 200% of salary based on a share price
at date of award of £11.00333, £8.62083 and £7.0767 respectively. 87.24% of the 2017 Awards vested on 20 July 2020 and
vesting of the 2018 Awards is 0%.

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REPORT OF THE DIRECTORS

Contents

The Directors present their report on the affairs of the Group together with the audited financial
statements for the year ended 31 March 2021.

Workspace Group PLC is incorporated in the UK and registered as a public limited company
in England and Wales. Its headquarters are in London and it is listed on the main market of the
London Stock Exchange.

This section of the Annual Report sets out the information required to be disclosed in the
Directors’ Report. Certain matters that would otherwise be disclosed in the Directors’ Report
have been reported elsewhere in the Annual Report and consequently, this Directors’ Report
should be read in conjunction with our Strategic Report on pages 1 to 98, and a description of the
Group’s business model on pages 11 to 19. It also includes our report on our ‘Doing the Right Thing’
programme, principal risks and uncertainties and the Statements on Going Concern, Viability and
Section 172 matters which can be found on pages 34 to 56, 63 to 70, 81 to 82 and 122 to 123.

The Corporate Governance Report and Chairman’s Governance Report for the year ended
31 March 2021, on pages 99 to 197, are incorporated by reference into this Directors’ Report.

Post balance sheet events
Details of post balance sheet events can be found on page 235.

Principal activities and business review
The Group is engaged in property investment and letting business space to businesses in London.
As at 31 March 2021 the Company had seven active subsidiaries, four of which are property
investment companies owning properties in Greater London. The other three companies are:
Workspace Management Limited; LI Property Services Limited; and Workspace 17 (Jersey) Limited.
A full list of the Company’s subsidiaries and other related undertakings appears on page 234.

Significant events which occurred during the year are detailed in the Chairman’s statement on
pages 6 to 7, the Chief Executive Officer’s Statement on pages 9 to 10 and the Business Review on
pages 71 to 80.

A description of the principal risks and uncertainties facing the Group can be found on pages 63
to 70. Details of the Group’s health and safety policies can be found on page 200 and information
on its environmental and community engagement activities can be found on pages 23 to 24.

Profit and dividends
The Group’s loss after tax for the year attributable to shareholders amounted to £235.7m
(2020: profit of £72.1m).

No interim dividend was paid in February 2021 (2020: 11.67 pence). The Board is proposing to
recommend the payment of a final dividend of 17.75 pence (2020: 24.49 pence) per share to
be paid on 6 August 2021 to shareholders whose names are on the Register of Members at the
close of business on 2 July 2021. This makes a total dividend of 17.75 pence (2020: 36.16 pence) for
the year.

Going concern and viability
The Going Concern and Viability Statements can be found on pages 81 to 82.

The Group’s activities, strategy and performance are explained in the Strategic Report on pages 1
to 98.

Further details on the financial performance and financial position of the Group are provided in
the financial statements on pages 210 to 235.

Financial risk management
The financial risk management objectives and policies of the Group are set out in note 18 to the
financial statements and in the principal risks and uncertainties section of this report on pages 63
to 70.

Disclosure of information to auditors
The Directors who held office at the date of approval of this Report of the Directors confirm that,
so far as they are each aware, there is no relevant information of which the Company’s auditor is
unaware; and each Director has taken all the steps that they ought to have taken as Directors to
make themselves aware of any relevant audit information and to establish that the Company’s
auditor is aware of that information.

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REPORT OF THE DIRECTORS CONTINUED

Contents

Information to be disclosed under LR9.8.4R
For the purpose of LR9.8.4CR, the information required to be disclosed by LR9.8.4R can be found
in the Annual Report in the following locations and is hereby incorporated by reference into this
Directors’ Report:

Substantial shareholdings in the Company
As at 31 March 2021, the following interests in voting rights over the issued share capital of the
Company had been notified.

Section
1
4

Topic
Interest capitalised
Details of long-term incentive schemes Remuneration Report, pages 176, 180 and 191

Location in the Annual Report
Financial statements, page 222 note 10

There is no further information required to be disclosed under LR9.8.4R.

Share capital and control
As at 31 March 2021, the Company’s issued share capital comprised a single class of 181,113,594
ordinary shares of £1.00 each. Details of the Company’s issued share capital are set out on
page 231. Full details of share options and awards under the terms of the Company’s share
incentive plans can be found on pages 232 to 234.

Other relevant requirements from the takeover directive are included elsewhere in the Report of
the Directors, the Corporate Governance Report, the Directors’ Remuneration Report and the
notes to the Group and Company financial statements. There are no agreements in place between
the Group and its employees or Directors for compensation for loss of office or employment that
occur because of a takeover bid.

Restrictions on transfer of shares
There are no restrictions on the transfer of ordinary shares in the Company other than in relation
to certain restrictions that are imposed from time to time by laws and regulations (for example
insider trading laws). In addition, pursuant to the Listing Rules of the Financial Conduct Authority,
Directors and certain officers and employees of the Group require the approval of the Company to
deal in ordinary shares of the Company.

Purchase of own shares
Under the Company’s Articles of Association, the Company may purchase any of its own shares.
The Company was granted authority at the 2020 Annual General Meeting to make market
purchases of its own ordinary shares. This authority will expire at the conclusion of the 2021
Annual General Meeting and a resolution will be proposed to renew this authority. No ordinary
shares were purchased under this authority during the year.

Shareholder
The London & Amsterdam Trust Company Limited
BlackRock, Inc.
Jupiter Asset Management Limited
M&G Investment Management Ltd
Aberdeen Standard Investments
Cohen & Steers Inc.
The Vanguard Group Inc.

Number of shares
53,482,291
16,747,659
11, 724,837
10,448,320
7,912,869
7,264,885
6,771,347

Percentage held
29.53%
9.25%
6.47%
5.77%
4.37%
4.01%
3.74%

As at 25 May 2021 the following interests in voting rights over the issued share capital of the
Company had been notified.

Shareholder
The London & Amsterdam Trust Company Limited
BlackRock, Inc.
Jupiter Asset Management Limited
M&G Investment Management Ltd
Cohen & Steers Inc.
The Vanguard Group Inc.

Number of shares
53,431,031
17,213,219
11,240,374
10,270,036
8,393,451
6,814,324

Percentage held
29.50%
9.50%
6.21%
5.67%
4.64%
3.77%

Board of Directors
The names and biographical details of the Directors and details of the Board Committees of which
they are members are set out on pages 106 to 109 and incorporated into this Report by reference.
Changes to the Directors during the year and up to the date of this Report are set out on page 105.
At the date of this Report there are currently nine Directors on the Board of Workspace Group
PLC. The Board may exercise all powers of the Company, subject to the Company’s Articles of
Association, the Companies Act 2006 and other applicable legislation. Changes to the Articles
of Association must be approved by shareholders in accordance with the Articles of Association
themselves and applicable legislation in force at the relevant time.

The Company’s current Articles of Association require any new Directors to stand for election at
the next AGM following their appointment. The Articles of Association also require each Director
to stand for re-election every three years following their election. However, in accordance with
the Code and the Company’s current practice, all continuing Directors will offer themselves for
election or re-election (as applicable) at the AGM on 22 July 2021.

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REPORT OF THE DIRECTORS CONTINUED

Contents

Details of the Directors’ interests in the shares of the Company and any awards granted to the
Executive Directors under any of the Company’s all-employee or Long-Term Incentive Plans
are given in the Directors’ Remuneration Report on pages 194 to 197. The Service Agreements
of the Executive Directors and the Letters of Appointment of Non-Executive Directors are
also summarised in the Directors’ Remuneration Report and are available for inspection at the
Company’s registered office.

The appointment and replacement of Directors is governed by the Company’s Articles of
Association, the Code, the Companies Act 2006 and any related legislation. Unless otherwise
determined by ordinary resolution of the Company, the Directors shall not be less than two or
more than ten in number. The Board may appoint any person to be a Director so long as the total
number of Directors does not exceed the limit prescribed in the Articles of Association. In addition
to any power of removal conferred by the Companies Act 2006, the Company may by ordinary
resolution remove any Director before the expiry of their period of office.

Directors’ indemnities
Under the Company’s Articles of Association, to the extent permitted by the Companies Act
2006, the Company may, to the extent permitted by law, indemnify any Director, Secretary or
other Officer of the Company against any liability and may also purchase and maintain insurance
against such liability. The Board considers that the provision of such indemnification is in keeping
with current market practice and believes that it is in the best interest of the Group to provide
such indemnities in order to attract and retain high-calibre Directors and Officers.

The Company purchased and maintained Directors’ and Officers’ liability insurance during the
year under review and at the date of approval of the Directors’ Report. In addition, in April 2021
qualifying third party indemnity provisions (as defined by Section 234 of the Companies Act
2006) came into force and remain in force in relation to certain losses and liabilities which the
Directors may incur to third parties in the course of acting as Directors or employees of the
Company or of any associated company.

Change of control
There are a number of agreements (including the Group’s borrowing facilities and other financial
instruments, details of which can be found in note 16 to the financial statements) that could allow
counterparties to terminate or alter those arrangements in the event of a change of control of the
Company.

Section 172(1) Statement
The Company’s Section 172(1) Statement can be found on page 122.

Employees
The Group values highly the commitment of its employees and has maintained its practice of
communicating business developments to them in a variety of formats. The Group’s employees
are kept informed of its activities and performance through a series of Director-led staff briefings
at key points during the year and the circulation of corporate announcements and other relevant
information to staff which is supplemented by updates on the intranet. These briefings also serve
as an informal forum for employees to ask questions about the Group.

Share schemes are a long-established and successful part of our total reward package,
encouraging and supporting employee share ownership. In particular, all employees are invited to
participate in the Group’s Savings Related Share Option Scheme.

The Group is committed to an active Equal Opportunities Policy from recruitment and selection,
through training and development, performance reviews and promotion. All decisions relating
to employment practices are objective, free from bias and based solely upon work criteria and
individual merit. The Group is responsive to the needs of its employees, customers and the
community at large. We are an organisation which uses everyone’s talents and abilities, and where
diversity is valued. The Group remains supportive of the employment and advancement of disabled
persons and monitors its promotion and recruitment practices such that they are fair and objective.

The Group encourages the continuous development and training of its employees and the
provision of equal opportunities for the training and career development of all employees.

The Group provides retirement benefits for the majority of its employees. Details of the Group’s
pension arrangements are set out in note 27 on page 235.

Further information on our employees and how we engage with them can be found on pages 22
and 118 to 119.

Health and safety
We take the health and safety of our employees, customers, visitors and others who may be
affected by our activities with the greatest seriousness and we fully comply with all health and
safety legislation applicable to our business.

In the year under review we monitored and reviewed our health and safety systems to promote
continued compliance with HSE standards and best practice, and carried out portfolio-wide
safety training with employees. This year we will to continue to promote a healthy environment
and culture across our organisation and provide the necessary training for head office and site
staff so that we remain competent in meeting our health and safety responsibilities. We have
made good progress with improvements to our safety processes and procedures, previously
identified by an external gap analysis.

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Contents

We are also focusing on our employees’ mental health as we feel it is essential to our overall
wellbeing, and as important as physical health. We have already undertaken several mental health
focused courses and have appointed a committee to look at how we can further assist employees.

Business conduct and compliance
See pages 84 and 85 for details of our key business conduct and compliance policies.

Covid-19

Training

Compliance
management

Internal health and
safety audits

Redevelopment
and refurbishment
projects and
contractor safety

During the complex challenges presented by Covid-19 we are taking robust
action to ensure that the wellbeing of our employees, customers and visitors
to our buildings is our first priority. We have reacted, and continue to react,
to Government advice and direction at short notice and proactively monitor
guidance from a variety of government and public health authorities. We
endeavour to provide the most up-to-date guidance, support and advice to
our employees and customers, and we are confident that we have the right
policies and procedures in place to continue to serve our customers.
We train our employees so that they are competent and confident to
carry out their jobs in a safe and professional manner. Our people lead by
example, working on the principle that if they display high standards in the
way they go about their business, then our customers and suppliers will
follow suit. Each new starter is given in-house induction training targeted
to the health and safety responsibilities they will hold, with ongoing training
provided via toolbox talks and regular formal meetings with managers and
members of the Health and Safety Committee.

With face-to-face training being impacted by Covid-19, this year we have
used online training solutions. During the year, 24 employees completed
IOSH Managing Safely courses, nine employees received asbestos training
and 76 employees received Workspace-specific fire safety training.
All our site staff and facilities managers, as well as some key head office
personnel, use a compliance monitoring tool, E-Logbooks, which is a proven
software system that enables us to monitor statutory compliance and
routine maintenance across the entire portfolio.
We are committed to continuous improvement and we undergo a series of
formal internal health and safety audits every year. The number of audits
per annum has increased this year with the intention to audit all sites at least
every three years. Evaluations of the results from these audits are used to
facilitate individual site safety improvements and identify areas where we
can enhance our safety procedures across the portfolio. This includes any
requirement for additional training, awareness or toolbox talks.
Redevelopment and refurbishment projects regularly take place across our
portfolio, on both customer-occupied and vacant sites. We closely manage
our contractors’ activities and the associated risks to the health and safety of
customers and visitors, particularly where building works are being carried
out in close proximity to common parts and customer-occupied areas. For
the sixth consecutive year, there have been no contractor-related accidents
or incidents that have affected our customers.

Greenhouse gas emissions
See pages 97 and 98 for details of our absolute emissions and emissions as an intensity ratio,
which are incorporated by reference into this Directors’ Report and fulfil the requirements of the
Greenhouse Gas Emissions (Directors’ Reports) Regulations 2013.

2020 Annual General Meeting
See page 116 for details of our 2020 Annual General Meeting.

2021 Annual General Meeting
The 35th Annual General Meeting of the Company will be held at the Company’s business centre
at Edinburgh House, 170 Kennington Lane, London, SE11 5DP on Thursday 22 July 2021 at 11.00am.
The Notice of Meeting, together with an explanation of the business to be dealt with at the
Meeting, is included as a separate document sent to shareholders who have elected to receive
hard copies of shareholder information and is also available on the Company’s website.

Following nine years as a Non-Executive Director of Workspace, Maria Moloney informed the
Board in April 2021 of her intention to step down with effect from the conclusion of the 2021
Annual General Meeting. Consequently, Maria will not be seeking re-election at the 2021 AGM.

Following shareholder engagement, in 2019 and 2020 we sought approval for a resolution
authorising political donations up to £20,000 in aggregate, which was a lower amount than we
had sought in previous years. This year we are again proposing a resolution with an upper limit
of £20,000 in aggregate. This resolution is proposed as a precaution to prevent the Company’s
normal business activities being inadvertently caught by the broad definitions used in the relevant
provisions of the Companies Act 2006. It remains the policy of the Company not to make political
donations or incur political expenditure within the ordinary meaning of those words and the Board
has no intention of using the authority for that purpose.

In addition, and in line with the resolution approved at last year’s AGM, the Directors are again
proposing a single resolution disapplying pre-emption rights for the 2021 Annual General Meeting
that would apply only in very limited circumstances. The proposed disapplication resolution is
limited to allotments and/or sales: (i) in connection with pre-emptive offers and offers to holders
of equity securities other than ordinary shares (if required by the rights of those securities or
as the Directors otherwise consider necessary); and (ii) in connection with the terms of any
employees’ share scheme for the time being operated by the Company.

By Order of the Board

Carmelina Carfora
Company Secretary
2 June 2021

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STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE
ANNUAL REPORT AND THE FINANCIAL STATEMENTS

The Directors are responsible for preparing the Annual Report and the Group and Parent
Company financial statements in accordance with applicable law and regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial
information included on the Company’s website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility statement of the Directors in respect of the annual financial report
We confirm that to the best of our knowledge:
– The financial statements, prepared in accordance with the applicable set of accounting

standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of
the Company and the undertakings included in the consolidation taken as a whole.

– The Strategic Report includes a fair review of the development and performance of the business

and the position of the issuer and the undertakings included in the consolidation taken as a
whole, together with a description of the principal risks and uncertainties that they face.

We consider the Annual Report and Accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary for shareholders to assess the Group’s
position and performance, business model and strategy.

Signed on behalf of the Board on 2 June 2021 by:

Graham Clemett
Chief Executive Officer

Dave Benson
Chief Financial Officer

Company law requires the Directors to prepare Group and Parent Company financial statements
for each financial year. Under that law they are required to prepare the Group financial statements
in accordance with international accounting standards in conformity with the requirements of
the Companies Act 2006 and applicable law and have elected to prepare the Parent Company
financial statements in accordance with UK accounting standards and applicable law, including
FRS 101 Reduced Disclosure Framework. In addition, the Group financial statements are required
under the UK Disclosure and Transparency Rules to be prepared in accordance with International
Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in
the European Union (“IFRSs as adopted by the EU”).

Under company law the Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of the Group and Parent
Company and of their profit or loss for that period. In preparing each of the Group and Parent
Company financial statements, the Directors are required to:
– Select suitable accounting policies and then apply them consistently.
– Make judgements and estimates that are reasonable, relevant and reliable
– For the Group financial statements, state whether they have been prepared in accordance with
international accounting standards in conformity with the requirements of the Companies Act
2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union (“IFRSs as adopted by the EU”).

– For the Parent Company financial statements, state whether applicable UK accounting

standards have been followed, subject to any material departures disclosed and explained in the
Parent Company financial statements.

– Assess the Group and Parent Company’s ability to continue as a going concern, disclosing, as

applicable, matters related to going concern.

– Use the going concern basis of accounting unless they either intend to liquidate the Group or

the Parent Company or to cease operations or have no realistic alternative but to do so.

The Directors are responsible for keeping adequate accounting records that are sufficient to
show and explain the Parent Company’s transactions and disclose with reasonable accuracy at
any time the financial position of the Parent Company and enable them to ensure that its financial
statements comply with the Companies Act 2006. They are responsible for such internal control
as they determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error, and have general responsibility for taking
such steps as are reasonably open to them to safeguard the assets of the Group and to prevent
and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic
Report, Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement
that complies with that law and those regulations.

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WORKSPACE GROUP PLC

1. OUR OPINION IS UNMODIFIED
We have audited the financial statements of Workspace Group PLC (“the Company”) for the year
ended 31 March 2021 which comprise the Consolidated and Parent Company’s Balance Sheets,
the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the
Consolidated Statement of Cash Flows, the Consolidated and Parent Company’s Statement‘s of
Changes in Equity, and the related notes, including the accounting policies in note 1.

In our opinion:
– the financial statements give a true and fair view of the state of the Group’s and of the parent

Company’s affairs as at 31 March 2021 and of the Group’s loss for the year then ended;
– the Group financial statements have been properly prepared in accordance international
accounting standards in conformity with the requirements of the Companies Act 2006
and International Financial Reporting Standards adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union;

– the parent Company financial statements have been properly prepared in accordance with UK

accounting standards, including FRS 101 Reduced Disclosure Framework; and

– the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS
Regulation to the extent applicable.

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs
(UK)”) and applicable law. Our responsibilities are described below. We believe that the audit
evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion
is consistent with our report to the audit committee.

We were first appointed as auditor by the shareholders on 14 July 2017. The period of total
uninterrupted engagement is for the 4 financial years ended 31 March 2021. We have fulfilled our
ethical responsibilities under, and we remain independent of the Group in accordance with, UK
ethical requirements including the FRC Ethical Standard as applied to listed public interest entities.
No non-audit services prohibited by that standard were provided.

Overview
Materiality:
group financial statements as a whole
Coverage
Key audit matters
Recurring risks

£25.5m (2020: £26.7m)
1% (2020: 1%) of total Group assets
100% (2020: 100%) of total Group assets

Group: Valuation of Investment property

New: Group: Revenue recognition

Parent: Valuation of derivatives

vs 2020

2. KEY AUDIT MATTERS: OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT
Key audit matters are those matters that, in our professional judgement, were of most significance
in the audit of the financial statements and include the most significant assessed risks of material
misstatement (whether or not due to fraud) identified by us, including those which had the
greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing
the efforts of the engagement team. We summarise below the key audit matters, in decreasing
order of audit significance, in arriving at our audit opinion above, together with our key audit
procedures to address those matters and, as required for public interest entities, our results
from those procedures. These matters were addressed, and our results are based on procedures
undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as
a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and
we do not provide a separate opinion on these matters.

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WORKSPACE GROUP PLC CONTINUED

2. KEY AUDIT MATTERS: OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT CONTINUED

Valuation of investment
property (Group)
(Group: £2,349.9 million;
2020: £2,586.3 million)

Refer to page 159 (Audit
Committee Report),
page 214 (accounting
policy) and page 222
(financial disclosures).

The risk

Subjective valuation
Investment properties is the largest balance in the financial statements and is held at fair
value in the Group’s financial statements, representing 90.6% (2020: 95%) of total assets.

Our response
We performed the tests below rather than seeking to rely on any of the group’s
controls because the nature of the balance is such that we would expect to
obtain audit evidence primarily through the detailed procedures described.

The portfolio is externally valued by qualified independent valuers, CBRE.

Each property is unique and determining fair value requires significant judgement and
estimation, in particular over the key assumptions of the estimated rental value and the yield.
The key assumptions will be impacted by a number of factors including location, quality
and condition of the building and occupancy. Valuing investment properties either under
development or with development potential can be further complicated by the need to
assess the likelihood of planning consent, an allowance for developer’s profit and forecast of
construction costs. Whilst comparable market transactions can provide valuation evidence,
the flexible office sector is still maturing and the unique nature of each property means that
a key factor in the property valuations are the assumptions made by the valuer.

Furthermore, each property valuation includes source data provided by directors and
relied on as accurate by the external valuer, primarily the database of tenancy contracts.
The relatively short average lease length in the Workspace portfolio and reduced market
comparable information for such flexible office space means the valuer is more reliant
on tenancy data to support their market rent assumptions than may be the case in other
property sectors. Therefore the valuation is more sensitive to the source data than may be
the case for more mature sectors with longer leases.

The effect of these matters is that, as part of our risk assessment, we determined that the
investment properties value has a high degree of estimation uncertainty, with a potential
range of reasonable outcomes greater than our materiality for the financial statements as a
whole, and possibly many times that amount.

Disclosure quality
The financial statements (note 10) disclose the sensitivity estimated by the Group.

Our procedures, assisted by our own property valuation specialist (for
procedures 1, 2 and 3), included:
– Assessing valuer’s credentials: We assessed CBRE’s objectivity, professional

qualifications and experience through discussions with them and reading
their valuation report.

– Methodology choice: We critically assessed the methodology used by the
valuers by considering whether the valuation report is in accordance with
the RICS Valuation Professional Standards ‘the Red Book’ and accounting
standards.

– Benchmarking assumptions: We held discussions with CBRE to critically

assess movements in property values. For a sample of properties selected
using various criteria including analysis of the value of a property as well as
correlation with movements in market rent, we evaluated and challenged
appropriateness of the key assumptions upon which these valuations were
based, including those relating to forecast market rents and yields, by making
a comparison to our own understanding of the market and to industry
benchmarks.

– Test of detail: We compared a sample of key inputs used in the valuations,

such as rental income and lease length, to the Group’s property management
system and lease contracts.

– Test of detail: For a selection of properties under development, we

assessed the progress of the development and evaluated assumptions over
constructions costs, agreeing them to construction contracts and directors’
project appraisals.

– Assessing transparency: Assessing whether the Group’s disclosures about
the sensitivity of the valuation of investment properties to changes in key
assumptions adequately reflected the related risks.

The Directors’ assessment of the extent of the disclosure is based on an evaluation of the
inherent risks to the valuation, including the possible economic effect of the coronavirus
pandemic.

Our results
– We found the valuation of investment properties and the disclosure of the
associated level of uncertainty to be acceptable (2020 result: acceptable).

The risk for our audit is whether or not those disclosures adequately address the
uncertainties within the valuation, and if so, whether those uncertainties are fundamental to
the users’ understanding of the financial statements.

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WORKSPACE GROUP PLC CONTINUED

2. KEY AUDIT MATTERS: OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT CONTINUED

The risk

Increased complexity
Rental income and significant lease incentives provided to customers are recognised on a
straight line basis over individual lease terms.

Revenue recognition
(Rental income: Group:
£118 million; 2020: £132.7
million)

Refer to page 216
(accounting policy)
and page 217 (financial
disclosure)

We do not consider rental income to contain a high risk of significant misstatement, or to be
subject to a significant level of judgement. However, due to the materiality of Revenue in the
context of the financial statements as a whole, it is considered to be one of the areas which
had the greatest effect on our overall audit strategy and allocation of resources in planning
and completing our audit.

In addition, as a result of the COVID-19 pandemic, the Group offered customers rental
discounts and deferrals of £19.9m (2020:£nil). The non-standard nature of these transactions
resulted in an increased inherent risk of error which warrants additional audit focus.

Our procedures included:
– Completeness and accuracy of tenancy data

– Test of detail: We performed sample testing of tenancy data to supporting

lease agreements to gain comfort over the accuracy of the data in the
property management system.

– Data and analytics: We calculated an expectation of the total rental

income for the year based on individual lease information recorded in the
property management system.

– Rental discounts:

– Test of detail: We tested a sample of rental deferrals offered to tenants as
a result of COVID-19 to assess whether they had been correctly accounted
for within the requirements of IFRS 16 (Leases) and IFRS 9 (Financial
instruments).

– Test of detail: We recalculated total rental discounts for the year by using

tenancy data and publicly available company announcements.

– Assessing transparency: We assessed the Group’s disclosures in relation

to rental discounts and the provision for expected credit losses.

Our results: We found that the recognition of revenue acceptable.
We performed the tests below rather than seeking to rely on any of the group’s
controls because the nature of the balance is such that we would expect to
obtain audit evidence primarily through the detailed procedures described.

Our procedures included:
– Test of detail: We agreed the carrying value of derivatives to valuations

obtained directly from the counter-party valuers.

– Benchmarking assumptions: using our own specialists, assessed the key

assumptions used in the valuations, such as foreign exchange rates, against
our own knowledge of the market and industry.

– Reperformance: using our own specialists, independently reperformed the

valuation calculation and compared to the company’s results.

Our results
– We found the valuation of derivatives to be acceptable (2020:acceptable).

Valuation of derivatives
(Parent)
(Parent: £8.7 million;
2020: £18.5 million)

Subjective estimate
The Parent Company has derivative financial instruments of £8.7 million (2020: £18.5 million).
The cash flow hedge is against a $100 million/£64.5 million loan (2020: $100 million/
£64.5 million).

Refer to page 226
(financial disclosures).

The Parent Company has a cross currency swap to ensure the US Dollar liability streams
generated from the US Dollar Notes are fully hedged and have a fixed rate liability
totalling £64.5 million (2020: £64.5 million). The swaps have been externally valued
and are designated as a cash flow hedge with changes in fair value dealt with in other
comprehensive income.

The valuations of the swaps are based on market movements which can fluctuate in the
year. It is not at a high risk of significant misstatement or subject to significant judgement.
However, this is considered to be the area that had the greatest effect on our overall parent
company audit.

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WORKSPACE GROUP PLC CONTINUED

2. KEY AUDIT MATTERS: OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT
CONTINUED
We continue to perform procedures over going concern. However, following refinancing in the
year, we have not assessed this as one of the most significant risks in our current year audit and,
therefore, it is not separately identified in our report this year.

The components within the scope of our work accounted for the percentages illustrated below.

The Group team performed the audit of the Group as if it was a single aggregated set of financial
information. The Group team performed the parent company audit. The audit was performed
using the materiality levels set out above.

In the prior year we reported a key audit matter in respect of the impact of uncertainties due to
the UK exiting the European Union. Following the trade agreement between the UK and the EU,
and the end of the EU-exit implementation period, the nature of these uncertainties has changed.
We continue to perform procedures over material assumptions in forward looking assessments
such as going concern and impairment tests however we no longer consider the effect of the UK’s
departure from the EU to be a separate key audit matter.

3. OUR APPLICATION OF MATERIALITY AND AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Materiality for the Group financial statements as a whole was set at £25.5 million (2020: £26.7
million), determined with reference to a benchmark of total Group assets of £2,593.6 million
(2020: £2,735.5 million), of which it represents 0.98% (2020: 0.98%).

In addition, we applied materiality of £3.75 million (2020: £4 million) to Group components of
adjusted trading profit after interest which comprises net rental income, administrative expenses
and net finance costs for which we believe misstatements of lesser amounts than materiality for
the financial statements as a whole could be reasonably expected to influence the Company’s
members’ assessment of the financial performance of the Group.

Materiality for the Parent Company financial statements as a whole was set at £15.64 million
(2020: £15.5 million), determined with reference to a benchmark of company total assets, of which
it represents 1% (2020: 1%).

In line with our audit methodology, our procedures on individual account balances and disclosures
were performed to a lower threshold, performance materiality, so as to reduce to an acceptable
level the risk that individually immaterial misstatements in individual account balances add up to a
material amount across the financial statements as a whole.

Performance materiality was set at 75% (2020: 75%) of materiality for the financial statements as
a whole, which equates to £19.1m (2020: £20.0) for the group and £11.73m (2020: £11.61) for the
parent company.

We applied this percentage in our determination of performance materiality because we did not
identify any factors indicating an elevated level of risk.

We agreed to report to the Audit Committee any corrected or uncorrected identified
misstatements exceeding £1.27 million (2020: £1.3 million) for the Group and exceeding £0.78
million (2020: £0.77 million) for the Parent Company; or £0.19 million (2020: £0.2 million) for
misstatements relating to accounts to which the lower materiality was applied, in addition to other
identified misstatements that warranted reporting on qualitative grounds.

TOTAL GROUP ASSETS AND MATERIALITY

£25.5m
Whole ﬁnancial statements materiality
(2020: £26.7m)

£19.1m
Whole ﬁnancial statements performance materiality
(2020: £20.0m)

£3.75m
Materiality applied to Group components of adjusted trading proﬁt
after interest
(2020: £4m)

£1.27m
Misstatements reported to the Audit Committee
(2020: £1.3m)

Total Group assets
(2020: £2,735.5m)
Group Materiality
(2020: £26.7m)

£2,547.5m

£25.5m

GROUP REVENUE

GROUP PROFIT
BEFORE TAX

GROUP TOTAL ASSETS

Group revenue
(2020: 100%)

100%

Group profit before tax

100%

Group total assets

100%

(2020: 100%)

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WORKSPACE GROUP PLC CONTINUED

4. GOING CONCERN
The Directors have prepared the financial statements on the going concern basis as they do
not intend to liquidate the Group or the Company or to cease their operations, and as they have
concluded that the Group’s and the Company’s financial position means that this is realistic. They
have also concluded that there are no material uncertainties that could have cast significant doubt
over their ability to continue as a going concern for at least a year from the date of approval of the
financial statements (“the going concern period”).

We used our knowledge of the Group, its industry, and the general economic environment to
identify the inherent risks to its business model and analysed how those risks might affect the
Group’s and Company’s financial resources or ability to continue operations over the going
concern period. The risks that we considered most likely to adversely affect the Group’s and
Company’s available financial resources over this period were:
– tenant default and significant reduction in rent collections impacting cash flow and earnings;
– compliance with loan covenants; and
– significant reduction in property values

We considered whether these risks could plausibly affect the liquidity or availability of borrowings
and debt refinancing in the going concern period by assessing the degree of downside
assumption that, individually and collectively, could result in a liquidity issue, taking into account
the Group’s current and projected cash and facilities (a reverse stress test).

We considered the completeness and accuracy of the matters covered in the going concern
disclosures and assessed whether they reflect the position of the Group’s financing and the risks
associated with the Group‘s ability to continue as a going concern.

5. FRAUD AND BREACHES OF LAWS AND REGULATIONS – ABILITY TO DETECT
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or
conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity
to commit fraud. Our risk assessment procedures included:
– Enquiring of directors and inspection of policy documentation as to the Group’s high-level
policies and procedures to prevent and detect fraud, including the Group’s channel for
“whistleblowing”, as well as whether they have knowledge of any actual, suspected or alleged
fraud.

– Reading Board minutes, Executive Committee minutes and attending Group audit committee

meetings.

– Considering remuneration incentive schemes and performance targets for management,

including total shareholder return, total property return, performance compared to IPD and
growth in trading profit after interest targets for management remuneration.

We communicated identified fraud risks throughout the audit team and remained alert to any
indications of fraud throughout the audit.

As required by auditing standards, and taking into account possible pressures to meet profit
targets and our overall knowledge of the control environment, we perform procedures to address
the risk of management override of controls, in particular the risk that Group management may be
in a position to make inappropriate accounting entries and the risk of bias in accounting estimates
and judgements such as significant assumptions used in the valuation of investment properties,
including estimated rental values and market based yields. On this audit we do not believe there is
a fraud risk related to revenue recognition because of the relative simplicity of revenue streams.

Our conclusions based on this work:
– we consider that the directors’ use of the going concern basis of accounting in the preparation

We also identified a fraud risk related to management’s potential manipulation of tenancy data
when determining property valuations in response to possible pressures to meet profit targets.

of the financial statements is appropriate;

– we have not identified, and concur with the directors’ assessment that there is not, a material

uncertainty related to events or conditions that, individually or collectively, may cast significant
doubt on the Group’s or Company’s ability to continue as a going concern for the going concern
period;

– we have nothing material to add or draw attention to in relation to the directors’ statement in
note 1 to the financial statements on the use of the going concern basis of accounting with no
material uncertainties that may cast significant doubt over the Group and Company’s use of
that basis for the going concern period, and we found the going concern disclosure in note 1 to
be acceptable; and

– the related statement under the Listing Rules set out on page 81 is materially consistent with the

financial statements and our audit knowledge.

However, as we cannot predict all future events or conditions and as subsequent events may result
in outcomes that are inconsistent with judgements that were reasonable at the time they were
made, the above conclusions are not a guarantee that the Group or the Company will continue in
operation.

We performed procedures including:
– Identifying journal entries and other adjustments to test based on risk criteria and comparing
the identified entries to supporting documentation. These included those posted by senior
finance management, those posted and approved by the same user and those posted to
unusual accounts.

– Assessing significant accounting estimates for bias.

Identifying and responding to risks of material misstatement due to non-compliance with laws
and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material
effect on the financial statements from our general commercial and sector experience, through
discussion with the directors and other management (as required by auditing standards), the
policies and procedures regarding compliance with laws and regulations.

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WORKSPACE GROUP PLC CONTINUED

We communicated identified laws and regulations throughout our team and remained alert to any
indications of non-compliance throughout the audit.

The potential effect of these laws and regulations on the financial statements varies considerably.

Firstly, the Group is subject to laws and regulations that directly affect the financial statements
including financial reporting legislation (including related companies legislation), distributable
profits legislation and taxation legislation (including conditions to maintain UK Real Estate
Investment Trust (“REIT”)) status in accordance with the REIT regime) and we assessed the extent
of compliance with these laws and regulations as part of our procedures on the related financial
statement items.

Secondly, the Group is subject to many other laws and regulations where the consequences
of non-compliance could have a material effect on amounts or disclosures in the financial
statements, for instance through the imposition of fines or litigation. We identified the following
areas as those most likely to have such an effect: health and safety, environmental and
sustainability legislation, and certain aspects of company legislation recognising the financial
nature of the Group’s activities and its legal form. Auditing standards limit the required audit
procedures to identify non-compliance with these laws and regulations to enquiry of the directors
and other management and inspection of regulatory and legal correspondence, if any. Therefore if
a breach of operational regulations is not disclosed to us or evident from relevant correspondence,
an audit will not detect that breach.

We assessed the legality of the distributions made by the Company in the period based on
comparing the dividends paid to the distributable reserves prior to each distribution, including
consideration of interim accounts filed during the year.

Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have
detected some material misstatements in the financial statements, even though we have properly
planned and performed our audit in accordance with auditing standards. For example, the further
removed non-compliance with laws and regulations is from the events and transactions reflected
in the financial statements, the less likely the inherently limited procedures required by auditing
standards would identify it.

In addition, as with any audit, there remained a higher risk of non-detection of fraud, as these
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect material misstatement. We are
not responsible for preventing non-compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.

6. WE HAVE NOTHING TO REPORT ON THE OTHER INFORMATION IN THE ANNUAL
REPORT
The directors are responsible for the other information presented in the Annual Report together
with the financial statements. Our opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or, except as explicitly stated
below, any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our
financial statements audit work, the information therein is materially misstated or inconsistent with
the financial statements or our audit knowledge. Based solely on that work we have not identified
material misstatements in the other information.

Strategic report and directors’ report
Based solely on our work on the other information:
– we have not identified material misstatements in the strategic report and the directors’ report;
– in our opinion the information given in those reports for the financial year is consistent with the

financial statements; and

– in our opinion those reports have been prepared in accordance with the Companies Act 2006.

Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to be audited has been properly
prepared in accordance with the Companies Act 2006.

Disclosures of emerging and principal risks and longer-term viability
We are required to perform procedures to identify whether there is a material inconsistency
between the directors’ disclosures in respect of emerging and principal risks and the viability
statement, and the financial statements and our audit knowledge.

Based on those procedures, we have nothing material to add or draw attention to in relation to:
– the directors’ confirmation within the viability statement page 81 that they have carried out a
robust assessment of the emerging and principal risks facing the Group, including those that
would threaten its business model, future performance, solvency and liquidity;

– the Emerging and Principal Risks disclosures describing these risks and how emerging risks are

identified, and explaining how they are being managed and mitigated; and

– the directors’ explanation in the viability statement of how they have assessed the prospects
of the Group, over what period they have done so and why they considered that period to
be appropriate, and their statement as to whether they have a reasonable expectation that
the Group will be able to continue in operation and meet its liabilities as they fall due over the
period of their assessment, including any related disclosures drawing attention to any necessary
qualifications or assumptions.

We are also required to review the viability statement, set out on page 81 under the Listing Rules.
Based on the above procedures, we have concluded that the above disclosures are materially
consistent with the financial statements and our audit knowledge.

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WORKSPACE GROUP PLC CONTINUED

Our work is limited to assessing these matters in the context of only the knowledge acquired
during our financial statements audit. As we cannot predict all future events or conditions and
as subsequent events may result in outcomes that are inconsistent with judgements that were
reasonable at the time they were made, the absence of anything to report on these statements is
not a guarantee as to the Group’s and Company’s longer-term viability.

Corporate governance disclosures
We are required to perform procedures to identify whether there is a material inconsistency
between the directors’ corporate governance disclosures and the financial statements and our
audit knowledge.

Based on those procedures, we have concluded that each of the following is materially consistent
with the financial statements and our audit knowledge:
– the directors’ statement that they consider that the annual report and financial statements

taken as a whole is fair, balanced and understandable, and provides the information necessary
for shareholders to assess the Group’s position and performance, business model and strategy;

– the section of the annual report describing the work of the Audit Committee, including the

significant issues that the audit committee considered in relation to the financial statements,
and how these issues were addressed; and

– the section of the annual report that describes the review of the effectiveness of the Group’s risk

management and internal control systems.

We are required to review the part of the Corporate Governance Statement relating to the Group’s
compliance with the provisions of the UK Corporate Governance Code specified by the Listing
Rules for our review.

We have nothing to report in this respect.

7. WE HAVE NOTHING TO REPORT ON THE OTHER MATTERS ON WHICH WE ARE
REQUIRED TO REPORT BY EXCEPTION
Under the Companies Act 2006, we are required to report to you if, in our opinion:
– adequate accounting records have not been kept by the parent Company, or returns adequate

for our audit have not been received from branches not visited by us; or

– the parent Company financial statements and the part of the Directors’ Remuneration Report to

be audited are not in agreement with the accounting records and returns; or
– certain disclosures of directors’ remuneration specified by law are not made; or
– we have not received all the information and explanations we require for our audit.

We have nothing to report in these respects.

8. RESPECTIVE RESPONSIBILITIES
Directors’ responsibilities
As explained more fully in their statement set out on page 202, the directors are responsible for:
the preparation of the financial statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error; assessing the
Group and parent Company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern; and using the going concern basis of accounting unless they
either intend to liquidate the Group or the parent Company or to cease operations, or have no
realistic alternative but to do so.

Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue our opinion
in an auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee
that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC’s website at
www.frc.org.uk/auditorsresponsibilities.

9. THE PURPOSE OF OUR AUDIT WORK AND TO WHOM WE OWE OUR
RESPONSIBILITIES
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of
Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state
to the Company’s members those matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members, as a body, for our
audit work, for this report, or for the opinions we have formed.

Richard Kelly (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London, E14 5GL
2 June 2021

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CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2021

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2021

Revenue
Direct costs
Net rental income
Administrative expenses
Trading profit

Loss on disposal of investment properties
Other expenses
Change in fair value of investment properties
Operating (loss)/ profit

Finance costs
Exceptional finance costs
(Loss)/ profit before tax
Taxation
(Loss)/ profit for the financial year after tax

Basic (loss)/ earnings per share
Diluted (loss)/ earnings per share

Notes
1
1
1
2

3(a)
3(b)
10
2

4
4

8
8

2021
£m
142.3
(60.8)
81.5
(19.0)
62.5

(0.1)
(0.2)
(257.7)
(195.5)

(23.8)
(16.4)
(235.7)
–
(235.7)

2020
£m
161.4
(39.4)
122.0
(17.7)
104.3

(0.8)
(0.2)
(7.5)
95.8

(23.3)
–
72.5
(0.4)
72.1

(130.3)p
(130.3)p

40.0p
39.7p

(Loss)/ profit for the financial year
Other comprehensive income:
Items that may be classified subsequently to profit or loss:
Change in fair value of other investments
Cash flow hedge – transfer to income statement
Cash flow hedge – change in fair value
Other comprehensive (loss)/ income in the year
Total comprehensive (loss)/ income for the year

The notes on pages 213 to 235 form part of these financial statements.

2021
£m
(235.7)

–
8.6
(9.8)
(1.2)
(236.9)

2020
£m
72.1

(1.9)
(4.2)
8.3
2.2
74.3

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CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2021

Contents

Shareholders’ equity
Share capital
Share premium
Investment in own shares
Other reserves
Retained earnings
Total shareholders’ equity

Notes

20
20
22
21

2021
£m

181.1
295.5
(9.6)
33.1
1,219.4
1,719.5

2020
£m

180.7
295.4
(9.6)
32.2
1,499.3
1,998.0

The notes on pages 213 to 235 form part of these financial statements.

The financial statements on pages 210 to 235 were approved and authorised for issue by the
Board of Directors on 2 June 2021 and signed on its behalf by:

Graham Clemett
Director

Dave Benson
Director

Non-current assets
Investment properties
Intangible assets
Property, plant and equipment
Other investments
Derivative financial instruments
Deferred tax

Current assets
Trade and other receivables
Assets held for sale
Cash and cash equivalents

Total assets

Current liabilities
Trade and other payables
Borrowings

Non-current liabilities
Borrowings
Lease obligations

Total liabilities

Net assets

Notes

11
12
16(e) & (f)
6

13
10
14

15
16(a)

16(a)
17

2021
£m

2020
£m

2,349.9
2.4
4.0
7.9
8.7
0.4
2,373.3

29.3
–
191.0
220.3
2,593.6

(95.0)
(156.6)
(251.6)

(596.2)
(26.3)
(622.5)
(874.1)

2,586.3
2.0
4.8
7.9
18.5
0.6
2,620.1

25.2
11.0
79.2
115.4
2,735.5

(83.1)
(9.0)
(92.1)

(617.2)
(28.2)
(645.4)
(737.5)

1,719.5

1,998.0

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2021

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2021

Balance at 31 March 2019
Profit for the financial year
Other comprehensive
income for the year
Total comprehensive income
Transactions with owners:
Share issues
Dividends paid
Share based payments
Balance at 31 March 2020
Profit for the financial year
Other comprehensive loss
for the year
Total comprehensive loss
Transactions with owners:
Share issues
Dividends paid
Share based payments
Balance at 31 March 2021

Notes

20
7
23

Attributable to owners of the Parent

Share
premium
£m
295.1
–

Investment
in own
shares
£m
(9.3)
–

Other
reserves
£m
27.4
–

Retained
earnings
£m
1,488.4
72.1

Total
share-
holders’
equity
£m
1,982.0
72.1

–
–

0.3
–
–
295.4
–

–
–

0.1
–
–
295.5

–
–

(0.3)
–
–
(9.6)
–

–
–

–
–
–
(9.6)

2.2
2.2

–
–
2.6
32.2
–

(1.2)
(1.2)

–
72.1

2.2
74.3

–
(61.2)
–
1,499.3
(235.7)

0.3
(61.2)
2.6
1,998.0
(235.7)

–
(235.7)

(1.2)
(236.9)

(0.4)
–
2.5
33.1

–
(44.2)
–
1,219.4

0.1
(44.2)
2.5
1,719.5

Share
capital
£m
180.4
–

–
–

0.3
–
–
180.7
–

–
–

0.4
–
–
181.1

The notes on pages 213 to 235 form part of these financial statements.

Cash flows from operating activities
Cash generated from operations
Interest paid
Tax (paid)/ received
Net cash inflow from operating activities

Cash flows from investing activities
Capital expenditure on investment properties
Proceeds from disposal of investment properties
(net of sale costs)
Purchase of intangible assets
Purchase of property, plant and equipment
Other income (overage receipts)
Purchase of investments
Net cash (outflow)/ inflow from investing activities

Cash flows from financing activities
Proceeds from issue of ordinary share capital
Finance costs for new/ amended borrowing facilities
Repayment of bank borrowings and Private
Placement Notes
Draw down of bank borrowings
Green bond proceeds
Own shares purchase (net)
Dividends paid
Net cash inflow/ (outflow) from financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at start of year
Cash and cash equivalents at end of year

Notes

16(h)
16(h)

19
19

The notes on pages 213 to 235 form part of these financial statements.

2021
£m

62.4
(23.4)
(0.6)
38.4

2020
£m

108.7
(24.1)
0.1
84.7

(23.6)

(59.7)

11.0
(1.2)
(1.2)
0.1
–
(14.9)

0.1
(2.0)

(217.0)
54.0
299.5
–
(46.3)
88.3

111.8

79.2
191.0

75.0
(0.9)
(2.3)
2.0
0.5
14.6

0.6
–

(90.1)
104.0
–
(0.3)
(61.0)
(46.8)

52.5

26.7
79.2

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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021

Contents

Workspace Group PLC (the ‘Company’) and its subsidiaries (together ‘the Group’) are engaged in
property investment in the form of letting of high-quality business accommodation to businesses
across London.

borrowings require compliance with LTV and Interest Cover covenants. As at the tightest test date
in the scenarios modelled, the Group could withstand a reduction in net rental income of 55% and a
fall in the asset valuation of 51% compared to 31 March 2021 before these covenants are breached,
assuming no mitigating actions are taken.

The Company is a public limited company which is listed on the London Stock Exchange and is
incorporated and domiciled in the UK.

The registered number of the Company is 2041612.

BASIS OF PREPARATION
These financial statements are presented in Sterling, which is the Company’s functional currency
and the Group’s presentation currency and have been prepared on a going concern basis, in
accordance with International Accounting Standards in conformity with the Companies Act 2006
(‘IFRS’) and the applicable legal requirements of the Companies Act 2006. In addition the Group
financial statements are required under the UK Disclosure and Transparency Rules 4.1.6, to be
prepared in accordance with International Financial Reporting Standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union (“IFRSs as adopted by the EU”).

The extended impact of the Covid-19 pandemic on the operations of the Group has been a key
consideration when assessing the appropriateness of applying the going concern basis in the
preparation of the financial statements. There is still some uncertainty as to how the economy
will recover and whether there will be any long term impact on the demand for office space. We
have therefore modelled a number of different scenarios considering a period of 12 months from
the date of signing of these financial statements. These scenarios include a severe, but realistically
possible, scenario which includes the following key assumptions:
– A gradual recovery period of two years from summer 2021 to return pre-pandemic levels of

90% occupancy.

– New lettings continue to be below the average price per sq. ft. of vacating customers until like

for-like occupancy levels reach 90%.

– Continued higher levels of counterparty risk, with bad debt significantly higher than

pre-pandemic levels.

– A further two months of Government restrictions on public movement in the winter of 2021

(“lockdown”).

– The forecast assumes there will be no movement in yield, but the property valuation will

decrease further in line with the fall in rent psf.

The Directors fully considered the Principal risks of the Company and how they may impact the
model. Further details of the principal risks can be found on pages 63 to 70.

The appropriateness of the going concern basis is reliant on the continued availability of borrowings
and compliance with loan covenants. The Group issued a £300m green bond and extended
two thirds of the £250m revolving loan facility in March 2021. At 31 March 2021, the Group had a
fully unsecured loan portfolio of £748.5m, which subsequently reduced to £684m following the
early prepayment in April 2021 of the private placement loan notes due in 2023. All outstanding

As at 31 March 2021, the Company had significant headroom on its facilities with £184m of cash and
undrawn facilities of £250m. Of the undrawn facilities, £83m is due to expire in June 2022. There is
no other debt due to be refinanced until June 2023. For the full period of the scenario tested, the
Group maintains sufficient headroom in its cash and loan facilities and loan covenants are met.

Consequently, the Directors are confident that the Group and Company will have sufficient funds
to continue to meet its liabilities as they fall due for at least 12 months from the date of approval
of the financial statements and therefore have prepared the financial statements on a going
concern basis.

NEW ACCOUNTING STANDARDS, AMENDMENTS AND GUIDANCE
a) During the year to 31 March 2021 the Group adopted the following accounting standards and

guidance:

IFRS Standards

IFRS 3 (amended)
IAS 1 and IAS 8 (amended)
IFRS 9, IAS 39, IFRS 7 (amended)

Amendments to References to the Conceptual Framework
in IFRS Standards
Definition of a Business
Definition of Material
Interest Rate Benchmark Reform

There was no material impact from the adoption of these accounting standard amendments on
the financial statements.

b) The following accounting standards and guidance are not yet effective but are not expected
to have a significant impact on the Group’s financial statements or will result in changes to
presentation and disclosure only. They have not been adopted early by the Group:

IFRS 17
IAS 1 (amended)
IFRS 10 and IAS 28 (amended)

IFRS 3 (amended)
IAS 16 (amended)

Insurance contracts
Classification of liabilities as current or non-current
Sale or Contribution of Assets between an investor and its
Associate or Joint Venture
Reference to the Conceptual Framework
Property, Plant and Equipment: Proceeds before intended use

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

SIGNIFICANT JUDGEMENTS, KEY ASSUMPTIONS AND ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting
principles requires the use of estimates and judgements that affect the reported amounts of assets
and liabilities at the balance sheet date and the reported amounts of revenues and expenses during
the reporting period. Although these estimates are based on management’s best knowledge of the
amount, event or actions, actual results ultimately may differ from those estimates.

The Group’s significant accounting policies are stated below. Not all of these accounting policies
require management to make subjective or complex judgements. The following is intended
to provide an understanding of the significant judgements within the accounting policies
that management consider critical because of the assumptions or estimation involved in their
application and their impact on the consolidated financial statements.

Investment property valuation
The Group uses the valuation performed by its independent valuer as the fair value of its
investment properties. The valuation is based upon the key assumptions of estimated rental values
and market based yields. With regard to redevelopments and refurbishments, future development
costs and an appropriate discount rate are also used. In determining fair value the valuers make
reference to market evidence and recent transaction prices for similar properties.

Management consider the significant assumptions to the valuation of investment properties to be
estimated rental values and market based yields. Sensitivities on these assumptions are provided
in note 10.

Inter company transactions, balances and unrealised gains from intra group transactions are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an
impairment of the asset transferred.

Investment properties
Investment properties are those properties owned or leased by the Group that are held either to
earn rental income or for capital appreciation, or both, and are not occupied by the Company or
subsidiaries of the Group.

Investment property is measured initially at cost, including related transaction costs. After initial
recognition investment property is held at fair value based on a valuation by an independent
professional external valuer at each reporting date. The valuation methods and key assumptions
applied are explained in note 10. Changes in fair value of investment property at each reporting
date are recorded in the consolidated income statement.

Investment properties acquired under leases are capitalised at the lease’s commencement at
the lower of the fair value of the leased property and the net present value of the minimum lease
payments. The investment properties acquired under leases are subsequently carried at fair value
plus an adjustment for the carrying amount of the lease obligation. The corresponding rental
obligations, net of finance charges, are included in current and non-current borrowings. Each
lease payment is allocated between liability and finance charges so as to achieve a constant rate
on the finance balance outstanding. The interest element of the finance cost is charged to the
consolidated income statement.

SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies adopted in the preparation of these consolidated financial
statements are set out below. These policies have been consistently applied to all years presented
unless stated otherwise.

Properties are treated as acquired at the point the Group assumes the significant risks and
rewards of ownership and are treated as disposed when these are transferred outside of the
Group’s control.

Basis of consolidation
The consolidated financial statements include the financial statements of the Company and all
its subsidiary undertakings up to 31 March 2021. Subsidiaries are all entities (including structured
entities) over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the Group until the date that control ceases.

Existing investment properties which undergo redevelopment and refurbishment for continued
future use remain in investment property where the purpose of holding the property continues to
meet the definition of investment property as defined above. Subsequent expenditure is charged
to the asset’s carrying amount only when it is probable that future economic benefits associated
with the expenditure will flow to the Group, and the cost of each item can be reliably measured.
Certain internal staff costs directly attributable to capital/redevelopment projects are capitalised.
All other repairs and maintenance costs are charged to the consolidated income statement during
the period in which they are incurred.

Capitalised interest on refurbishment/redevelopment expenditure is added to the asset’s carrying
amount. Borrowing costs capitalised are calculated by reference to the actual interest rate payable
on borrowings, or if financed out of general borrowings by reference to the average rate payable
on funding the assets employed by the Group and applied to the direct expenditure on the
property undergoing redevelopment. Interest is capitalised from the date of commencement of
the redevelopment activity until the date when substantially all the activities necessary to prepare
the asset for its intended use are complete.

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

Investment properties are recognised as ‘assets held for sale’ when it is considered highly
probable that sale completion will take place. This is assumed when a sale has exchanged
contracts by the balance sheet date and its carrying amount is highly probable to be recovered
within one year.

Income from the sale of assets is recognised when the significant risks and returns have been
transferred to the buyer. In the case of sales of properties this is generally taken on completion of
the contract. In the case of a part disposal agreement, the part of the asset being disposed will be
derecognised from investment property when completion is reached or when a lease agreement
is signed (i.e. when the risks and rewards of this part of the site transfer to the developer). Profit or
loss on disposal is taken as the consideration receivable (net of costs) less the latest valuation (net
book value) and is taken to other expense.

Consideration can take the form of cash, new commercial buildings and a right to future overage
(generally being a share in the proceeds of any future sale of the residential development to be
constructed by the developer). Revenue is recognised when all relevant criteria in IFRS 15 are met
under the five-step model and recognised in the period they were earned.

Consideration (including overage) is measured at the fair value of the consideration received/
receivable.

Commercial property to be received is fair valued using the residual method described in note
10 and is included in investment property. Changes in fair value are recognised through the
consolidated income statement in accordance with IAS 40.

Overage is only recognised once an agreement has been signed with a residential developer.
Overage represents a financial asset and is designated as a financial asset at fair value through
profit or loss upon initial recognition. The carrying value of overage is assessed at each period end
and changes in fair value are taken to other expense.

Acquisitions
An acquisition is recognised when the risks and rewards of ownership have transferred. This is
usually on completion of the transaction. Business combinations are accounted for using the
acquisition method. Any excess of the purchase consideration over the fair value of the net assets
acquired is recognised as goodwill, and reviewed annually for impairment. Any discount received
or acquisition-related costs are recognised in the consolidated income statement.

Intangible assets
Intangible assets are stated at historical cost, less accumulated amortisation. Acquired computer
software licences and external costs of implementing or developing computer software programs
and websites are capitalised. These costs are amortised over their estimated useful lives of five
years on a straight-line basis.

Costs associated with maintaining computer software programs are recognised as an expense as
they fall due.

Property, plant and equipment
Equipment and fixtures
Equipment and fixtures are stated at historical purchase cost less accumulated depreciation
and impairment. Historical cost includes the original purchase price of the asset and the costs
attributable to bringing the asset to its working condition for its intended use.

Subsequent expenditure is charged to the asset’s carrying amount or recognised as a separate
asset only when it is probable that future economic benefits associated with the expenditure
will flow to the Group and the cost of each item can be reliably measured. All other repairs and
maintenance costs are charged to the consolidated income statement during the period in which
they are incurred.

Depreciation is provided using the straight-line method to allocate the cost less estimated residual
value over the assets’ estimated useful lives which range from four to ten years.

The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at least at
each financial year end. An asset’s carrying amount is written down immediately to its recoverable
amount if its carrying amount is greater than its estimated recoverable amount.

Other investments
Investments in unlisted shares are accounted for under IFRS 9 at fair value, using a valuation
multiple and financial information. Changes in fair value are shown in the consolidated statement
of comprehensive income.

Trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently measured
at amortised cost less provision for impairment based on the expected credit loss, which uses
a lifetime expected loss allowance for all trade receivables based on the individual occupiers’
circumstance. The amount of the provision is the difference between the asset’s carrying amount
and the present value of estimated future cash flows. The provision is recorded in the consolidated
income statement.

Deferred consideration on the disposal of investment properties is included within trade and other
receivables. It is fair valued on recognition and at each year end with any movement taken to
other expense.

Trade and other payables
Trade and other payables are initially recognised at fair value and subsequently held at amortised cost.

Cash and cash equivalents
Cash is represented by cash in hand, restricted cash in the form of tenants’ deposits and deposits
held on call with banks. Cash equivalents are highly liquid investments that mature in no more
than three months from the date of acquisition and that are readily convertible to known amounts
of cash with insignificant risk of change in value. Bank overdrafts are included in current liabilities
but within cash and cash equivalents for the purpose of the consolidated cash flow statement.

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
subsequently stated at amortised cost, with any difference between the initial amount (net of
transaction costs) and the redemption value being recognised in the income statement over the
period of the borrowings, using the effective interest method, except for interest capitalised on
redevelopments.

Foreign currency translation
Foreign currency transactions are translated into Sterling using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement
of such transactions and from the translation at year-end rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the consolidated income statement, except
when deferred in other comprehensive income as qualifying cash flow hedges.

Derivative financial instruments and hedge accounting
The Group enters into derivative transactions in order to manage its exposure to foreign currency
fluctuations and interest rate risks. Financial derivatives are recorded at fair value calculated by
valuation techniques based on market prices, estimated future cash flows and forward interest rates.

For financial derivatives (where hedge accounting is not applied) movements in fair value are
recognised in the consolidated income statement. In line with IFRS 13, fair values of financial
derivatives are measured at the estimated amount that the Group would receive or pay to
terminate the agreement at the balance sheet date, taking into account the current interest
expectations and current credit value adjustment of the counterparties.

The Group applies hedge accounting for certain derivatives that are designated and effective as
hedges of future cash flows (cash flow hedges). The Group documents at the inception of the
transaction the relationship between hedging instruments and hedged items, as well as its risk
management objectives and strategy for undertaking various hedging transactions. The Group
also documents its assessment, both at hedge inception and on an ongoing basis, of whether
the derivatives that are used in hedging transactions are highly effective in offsetting changes
in fair values or cash flows of hedged items. The fair values of various derivative instruments
used for hedging purposes are disclosed in note 16. Movements on the hedging reserve in other
comprehensive income are shown in note 20.

For cash flow hedges, the effective portion of changes in the fair value of derivatives that are
designated and qualify as cash flow hedges is recognised in the consolidated statement of
other comprehensive income. The gain or loss relating to the ineffective portion is recognised
immediately in the consolidated income statement within other gains/(losses). Amounts
accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects
profit or loss (for example, to offset the currency movement on borrowings that are hedged at
each period end). The gain or loss relating to the effective portion of swaps hedging the currency
of borrowings is recognised in the consolidated income statement.

Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction, net of tax, from the proceeds.

Investment in own shares
The Group operates an Employee Share Ownership Trust (‘ESOT’) and a trust for the Share
Incentive Plan (‘SIP’). When the Group funds these trusts in order to purchase Company shares,
the loan is deducted from shareholders’ equity as investment in own shares.

Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to
the chief operating decision maker. The chief operating decision maker is the person or group that
allocates resources to and assesses the performance of the operating segments of an entity. The
Group has determined that its chief operating decision maker is the Executive Committee of the
Company. The Group considers that it has only one operating segment being a single portfolio of
commercial property providing business accommodation for rent in London.

Revenue recognition
Revenue comprises rental income, service charges and other sums receivable from the Group’s
investment properties. Other sums comprise insurance charges, supplies of utilities, premia
associated with surrender of tenancies, commissions, fees and other sundry income.

All the Group’s properties are leased out under operating leases and are included in investment
property in the consolidated balance sheet. In accordance with IFRS 16, rental income from
leases is recognised in the consolidated income statement on a straight-line basis over the lease
term. Rent received in advance is deferred in the consolidated balance sheet and recognised in
the period to which it relates. If the Group provides significant incentives to its customers the
incentives are recognised over the lease term on a straight-line basis.

Service charges and other sums receivable from tenants are recognised on an accruals basis by
reference to the stage of completion of the relevant service or transactions at the reporting date.
These services generally relate to a 12-month period.

Following the outbreak of Covid-19, Workspace provided assistance to its customers in the form
of rent deferrals and rent discounts. Rent deferrals are recognised on a straight line basis over
the life of the lease. Rent discounts were provided to customers retrospectively and after the rent
had been invoiced. These discounts are considered to be a partial extinguishment of the rent
receivable and are treated as a derecognition of a financial asset in accordance with IFRS 9 in the
period to which they relate to.

Direct costs
Direct costs comprise service charges and other costs directly recoverable from tenants and non-
recoverable costs directly attributable to investment properties and other revenue streams.

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

Exceptional items
Exceptional items are those items that in the Directors’ view are required to be separately disclosed by
virtue of their size or incidence to enable a full understanding of the Group’s financial performance.

Dividend distributions
Final dividend distributions to the Company’s shareholders are recognised as a liability in the
Group’s financial statements in the period in which the dividends are approved, while interim
dividends are recognised when paid.

Share based payments
The Group operates a number of share schemes under which the Group receives services from
employees as consideration for equity instruments of the Group.

The fair value of the employee services received in exchange for the grant of share awards and
options is recognised as an expense over the vesting period.

Fair value is measured by the use of Black-Scholes and Binomial option pricing models. The
expected life used in the models has been adjusted, based on management’s best estimate, for
the effects of non-transferability, exercise restrictions and behavioural considerations.

Pensions
The Group operates a defined contribution pension scheme. Contributions are charged to the
consolidated income statement on an accruals basis.

Taxation
Current income tax is tax payable on the taxable income for the year and any prior year
adjustment, and is calculated using tax rates that are relevant to the financial year.

Deferred tax is provided in full on temporary differences between the tax base of an asset or
liability and its carrying amount in the balance sheet. Deferred tax is determined using tax rates
that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets
are recognised when it is probable that taxable profits will be available against which the deferred
tax asset can be utilised.

Compliance with the Real Estate Investment Trust (‘REIT’) taxation regime
The Group is a REIT and is thereby exempt from tax on both rental profits and chargeable gains
from its UK property rental business.

In order to retain REIT status, certain ongoing criteria must be maintained. The main criteria are as
follows:
– At the start of each accounting period, the assets of the tax exempt business must be at least

75% of the total value of the Group’s assets.

– At least 75% of the Group’s total profits must arise from the tax exempt business.
– At least 90% of the tax exempt business earnings must be distributed.

1. ANALYSIS OF NET RENTAL INCOME AND SEGMENTAL INFORMATION

Rental income
Service charges
Empty rates and other non-
recoverables
Services, fees, commissions and
sundry income

2021

Direct
costs
£m
(24.4)
(24.6)

Net rental
income
£m
93.6
(4.3)

Revenue
£m
132.7
21.8

2020

Direct
costs
£m
(2.2)
(25.5)

Net rental
income
£m
130.5
(3.7)

Revenue
£m
118.0
20.3

–

(7.1)

–

(6.3)

4.0
142.3

(4.7)
(60.8)

(0.7)
81.5

6.9
161.4

(5.4)
(39.4)

1.5
122.0

Included within direct costs for rental income and service charge in the period are amounts
of £17.8m (2020: £nil) and £2.1m (2020: £nil) respectively, relating to discounts provided to
customers, accounted for in accordance with IFRS 9. Additionally, a charge of £4.2m (2020: £0.4m)
for expected credit losses in respect of receivables from customers is recognised in direct costs of
rental income in the period.

All of the properties within the portfolio are geographically close to each other and have similar
economic features and risks. Management information utilised by the Executive Committee
to monitor and review performance is reviewed as one portfolio. As a result, management
have determined that the Group operates a single operating segment providing business
accommodation for rent in London.

2. OPERATING PROFIT
The following items have been charged in arriving at operating profit:

Depreciation1
Staff costs (including share based costs)1 (note 5)
Repairs and maintenance expenditure on investment properties
Trade receivables impairment (note 13)
Amortisation of intangibles
Audit fees payable to the Company’s Auditor

2021
£m
2.0
20.1
2.5
3.5
0.9
0.2

2020
£m
0.9
18.7
2.4
0.8
0.5
0.2

1. Charged to direct costs and administrative expenses based on the underlying nature of the expenses.

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Contents

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

2. OPERATING PROFIT CONTINUED

3(B). OTHER EXPENSES

Auditor’s remuneration: services provided by the Company’s Auditor and
its associates

Audit fees:
Audit of Parent Company and consolidated financial statements
Audit of subsidiary financial statements

Fees for other services:
Audit-related assurance services
Total fees payable to Auditor

Total administrative expenses are analysed below:
Staff costs
Cash-settled share based costs
Equity settled share based costs
Other

3(A). LOSS ON DISPOSAL OF INVESTMENT PROPERTIES

Proceeds from sale of investment properties (net of sale costs)
Book value at time of sale
Loss on disposal

2021
£000

207
33
240

96
336

2021
£m

11.3
0.2
2.3
5.2
19.0

2021
£m
11.0
(11.1)
(0.1)

2020
£000

178
31
209

31
240

2020
£m

9.8
–
2.6
5.3
17.7

2020
£m
79.5
(80.3)
(0.8)

Change in fair value of deferred consideration

2021
£m
0.2
0.2

2020
£m
0.2
0.2

The value of deferred consideration (cash and overage) from the sale of investment properties has
been revalued by CBRE Limited at 31 March 2021 and 31 March 2020. This resulted in a reduction
in the fair value of deferred consideration of £0.2m at 31 March 2021 (31 March 2020: £0.2m). The
amounts receivable are included in the consolidated balance sheet under current trade and other
receivables (note 13).

4. FINANCE COSTS

Interest payable on bank loans and overdrafts
Interest payable on other borrowings
Amortisation of issue costs of borrowings
Interest payable on leases
Interest capitalised on property refurbishments (note 10)
Foreign exchange (losses)/ gains on financing activities
Cash flow hedge – transfer from/ (to) equity
Finance costs
Exceptional finance costs
Total finance costs

2021
£m
(3.1)
(18.6)
(0.9)
(1.6)
0.4
(8.6)
8.6
(23.8)
(16.4)
(40.2)

2020
£m
(4.1)
(18.6)
(0.7)
(1.7)
1.8
4.2
(4.2)
(23.3)
–
(23.3)

The exceptional finance costs relate to the refinancing of the $100m & £84m private placement
notes due 2023 which were repaid early in April 2021. An irrevocable notice for the repayment
was given in March 2021. The costs included a £16.3m premium on redemption and £0.1m
of unamortised finance costs. The costs have been calculated in accordance with IFRS 9,
re-estimating the cash flows based on original effective interest rate with the adjustment
being taken through P&L.

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

5. EMPLOYEES AND DIRECTORS

Staff costs for the Group during the year were:
Wages and salaries
Social security costs
Other pension costs (note 27)
Cash-settled share based costs (note 23)
Equity settled share based costs (note 23)

Less costs capitalised

The monthly average number of people employed during the year was:
Head office staff (including Directors)
Estates and property management staff

2021
£m
16.3
2.1
0.8
0.2
2.3
21.7
(1.6)
20.1

2021
Number
121
118
239

2020
£m
15.3
1.8
0.7
–
2.6
20.4
(1.7)
18.7

2020
Number
117
118
235

The emoluments and pension benefits of the Directors are determined by the Remuneration
Committee of the Board and are set out in detail in the Directors’ Remuneration Report on
pages 167 to 197. These form part of the financial statements.

Taxation chargeable in the year relates to income from non REIT activities such as overage,
meeting room income and utilities recharges.

The tax on the Group’s profit for the year differs from the standard applicable corporation tax rate
in the UK of 19% (2020: 19%). The differences are explained below:

(Loss)/ profit before taxation

Tax at standard rate of corporation tax in the UK of 19%
(2020: 19%)
Effects of:
REIT exempt income
Changes in fair value not subject to tax as a REIT
Share based payment adjustments
Overage income subject to tax when received
Unrecognised losses carried forward
Utilisation of losses unrecognised brought forward
Other non-taxable expenses
Total taxation charge

2021
£m
(235.7)

(44.8)

(8.0)
49.0
(0.1)
–
3.8
–
0.1
–

2020
£m
72.5

13.8

(14.3)
1.4
–
(0.1)
–
(0.4)
–
0.4

Total Directors’ emoluments for the financial year were £1.7m (2020: £2.9m), comprising of £1.6m
(2020: £1.4m) of Directors’ remuneration, nil (2020: £1.4m) gain on exercise of share options and
£0.1m (2020: £0.1m) of cash contributions in lieu of pension in respect of two Directors (2020: two).

The Group is a Real Estate Investment Trust (‘REIT’). The Group’s UK property rental business
(both income and capital gains) is exempt from tax. The Group estimates that as the majority of its
future profits will be exempt from tax, future tax charges are likely to be low.

6. TAXATION

Current tax:
UK corporation tax
Adjustments to tax in respect of previous periods

Deferred tax:
On origination and reversal of temporary differences

Total taxation charge

2021
£m

–
–
–

2020
£m

0.8
–
0.8

(0.4)
–
0.4

A UK corporation rate of 19% (effective 1 April 2020) was substantively enacted on 17 March 2020,
reversing the previously enacted reduction in the rate from 19% to 17%. This will increase the
company’s future current tax charge accordingly. The deferred tax asset at balance sheet date has
been calculated at 19% (2020: 19%).

The Group currently has an unrecognised asset in relation to tax losses carried forward of £5.6m
(2020: £1.3m) calculated at a corporation tax rate of 19% (2020: 19%).

Deferred tax assets:
– Deferred tax to be recovered within 12 months
Deferred tax liabilities:
– Deferred tax liabilities to be recovered within 12 months
Deferred tax assets (net)

2021
£m

0.5

(0.1)
0.4

2020
£m

0.8

(0.2)
0.6

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

6. TAXATION CONTINUED
The movement in deferred tax assets and liabilities during the year, without taking into
consideration the offsetting of balances within the same tax jurisdiction, is as follows:

Deferred tax liabilities
At 1 April 2019
Credited to income statement
At 31 March 2020
Credited to income statement
At 31 March 2021

Deferred tax assets
At 1 April 2019
Charged to income statement
At 31 March 2020
Other movement
Charged to income statement
At 31 March 2021

7. DIVIDENDS

Other income
(overage receipts)
£m
0.6
(0.4)
0.2
(0.1)
0.1

Expenses
(share based
payment)
£m
(0.6)
–
(0.6)
–
0.1
(0.5)

Tax losses
£m
(0.2)
–
(0.2)
0.2
–
–

Total
£m
0.6
(0.4)
0.2
(0.1)
0.1

Total
£m
(0.8)
–
(0.8)
0.2
0.1
(0.5)

For the year ended 31 March 2019:
Final dividend

For the year ended 31 March 2020:
Interim dividend
Final dividend

Dividends for the year
Timing difference on payment of withholding tax
Dividends cash paid

Payment date

Per share

2021
£m

2020
£m

August 2019

22.26p

–

40.1

February 2020
August 2020

11.67p
24.49p

–
44.2

44.2
2.1
46.3

21.1
–

61.2
(0.2)
61.0

The Directors are proposing a final dividend in respect of the financial year ended 31 March 2021
of 17.75p pence per ordinary share which will absorb an estimated £32.1m of revenue reserves and
cash. If approved by the shareholders at the AGM, it will be paid on 6 August 2021 to shareholders
who are on the register of members on 2 July 2021. The dividend will be paid as a REIT Property
Income Distribution (‘PID’) net of withholding tax where appropriate.

8. EARNINGS PER SHARE

Earnings used for calculating earnings per share:
Basic and diluted earnings
Change in fair value of investment properties
Exceptional finance costs
Profit on disposal of investment properties
EPRA earnings
Adjustment for non-trading items:
Other expenses
Taxation
Trading profit after interest

2021
£m
(235.7)
257.7
16.4
0.1
38.5

0.2
–
38.7

2020
£m
72.1
7.5
–
0.8
80.4

0.2
0.4
81.0

Earnings have been adjusted to derive an earnings per share measure as defined by the European
Public Real Estate Association (‘EPRA’) and an adjusted underlying earnings per share measure.

Number of shares used for calculating earnings per share:
Weighted average number of shares (excluding own shares held
in trust)
Dilution due to share option schemes
Weighted average number of shares for diluted earnings per
share

2021
Number

2020
Number

180,839,945
–

180,465,649
981,867

180,839,945

181,447,516

In pence:
Basic (loss)/ earnings per share
Diluted (loss)/ earnings per share
EPRA earnings per share
Adjusted underlying earnings per share1

2021
(130.3p)
(130.3p)
21.3p
21.3p

2020
40.0p
39.7p
44.5p
44.6p

1. Adjusted underlying earnings per share is calculated by trading profit after interest on a diluted weighted average number of

shares of 181,831,833 (2020: 181,447,516).

The diluted loss per share for the period to 31 March 2021 has been restricted to a loss of 130.3p per share, as the loss per share
cannot be reduced by dilution in accordance with IAS 33, Earnings per Share.

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

9. NET ASSETS PER SHARE AND TOTAL ACCOUNTING RETURN

Net assets used for calculating net assets per share:
Net assets at end of year (basic)
Derivative financial instruments at fair value
EPRA net assets

Number of shares used for calculating net assets per share:
Shares in issue at year end
Less own shares held in trust at year end
Dilution due to share option schemes
Number of shares for calculating diluted adjusted net assets
per share

EPRA net assets per share
Basic net assets per share
Diluted net assets per share

2021
£m
1,719.5
(8.7)
1,710.8

2020
£m
1,998.0
(18.5)
1,979.5

2021
Number
181,113,594
(159,139)
1,116,127

2020
Number
180,747,868
(174,719)
1,232,747

182,070,582

181,805,896

2021
£9.40
£9.50
£9.44

2020
£10.89
£11.07
£10.99

Net assets have been adjusted and calculated on a diluted basis to derive a net asset per share
measure as defined by EPRA.

EPRA Net Asset Value Metrics
EPRA published updated best practice reporting guidance in October 2019, which included three
new Net Asset Valuation metrics; EPRA Net Reinstatement Value (NRV), EPRA Net Tangible
Assets (NTA) and EPRA Net Disposal Value (NDV). This new set of EPRA NAVs metrics came into
full effect for accounting periods starting from 1 January 2020, presented below for comparison
to the previous EPRA NAV metric.

IFRS Equity attributable to
shareholders
Fair value of derivative financial
instruments
Intangibles per IFRS balance sheet
Excess of fair value of debt over
book value
Purchasers’ costs
New EPRA measure
New EPRA measure per share

March 2021

EPRA
NRV
£m

EPRA
NTA
£m

EPRA
NDV
£m

March 2020

EPRA
NRV
£m

EPRA
NTA
£m

EPRA
NDV
£m

1,719.5

1,998.0

(8.7)
–

(8.7)
(2.3)

–
–

(18.5)
–

(18.5)
(2.0)

–
–

–
158.1
1,868.9
£10.26

–
–
1,708.5
£9.38

22.2
–
1,741.7
£9.57

–
187.8
2,167.3
£11.92

–
–
1,977.5
£10.88

11.9
–
2,009.9
£11.06

Reconciliation to previously reported EPRA NAV

EPRA NAV
Include fair value of derivative
financial instruments
Exclude intangibles per IFRS balance
sheet
Excess of fair value of debt over
book value
Purchasers’ costs
New EPRA measure

EPRA
NRV
£m
1,710.8

March 2021

EPRA
NTA
£m
1,710.8

March 2020

EPRA
NDV
£m
1,710.8

EPRA
NRV
£m
1,979.5

EPRA
NTA
£m
1,979.5

EPRA
NDV
£m
1,979.5

–

(2.3)

8.7

–

18.5

(2.0)

–

–
158.1
1,868.9

–
–
1,708.5

22.2
–
1,741.7

–
187.8
2,167.3

–
–
1,977.5

11.9
–
2,009.9

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

9. NET ASSETS PER SHARE AND TOTAL ACCOUNTING RETURN CONTINUED
Total accounting return

Total Accounting Return
Opening EPRA net tangible assets per share (A)
Closing EPRA net tangible assets per share
(Decrease)/ Increase in EPRA net tangible assets per share
Ordinary dividends paid in the year
Total return (B)
Total accounting return (B/A)

2021
£
10.88
9.38
(1.50)
0.24
(1.26)
(11.5%)

2020
£
10.85
10.88
0.03
0.34
0.37
3.4%

The total accounting return for the year comprises the growth in absolute EPRA net tangible assets
per share plus dividends paid in the year as a percentage of the opening EPRA net tangible assets
per share. The total return for the year ended 31 March 2021 was (11.5%) (31 March 2020: 3.4%).

10. INVESTMENT PROPERTIES

Balance at 1 April
Purchase of investment properties
Capital expenditure
Change in value of lease obligations
Capitalised interest on refurbishments (note 4)
Disposals during the year
Change in fair value of investment properties
Less: Reclassified as deferred consideration
Less: Classified as assets held for sale
Balance at 31 March

2021
£m
2,586.3
–
22.8
(1.9)
0.4
–
(257.7)
–
–
2,349.9

2020
£m
2,591.4
–
53.5
12.4
1.8
(65.3)
(7.5)
–
–
2,586.3

Investment properties represent a single class of property being business accommodation for rent
in London.

Capitalised interest is included at a rate of capitalisation of 3.7% (2020: 4.0%). The total amount of
capitalised interest included in investment properties is £14.5m (2020: £14.1m).

The change in fair value of investment properties is recognised in the consolidated income statement.

Investment properties include buildings with a carrying amount of £271m (2020: £305m) held
under leases with a carrying amount of £26.3m (2020: £28.2m). Investment property lease
commitment details are shown in note 17.

Valuation
The Group’s investment properties are held at fair value and were revalued at 31 March 2021 by
the external valuer, CBRE Limited, a firm of independent qualified valuers in accordance with
the Royal Institution of Chartered Surveyors Valuation – Global Standards at this balance sheet
date. All the properties are revalued at period end regardless of the date of acquisition. In line
with IFRS 13, all investment properties are valued on the basis of their highest and best use.
For like-for-like properties their current use equates to the highest and best use. For properties
undergoing refurbishment or redevelopment, most of these are currently being used for business
accommodation in their current state. However, the valuation is based on the current valuation at
the balance sheet date including the impact of the potential refurbishment and redevelopment as
this represents the highest and best use.

The Executive Committee and the Board both conduct a detailed review of each property
valuation to review appropriate assumptions have been applied. Meetings are held with the
valuers to review and challenge the valuations, to confirm that they have considered all relevant
information, and rigorous reviews are performed to check that valuations are sensible. In
particular, they discussed the impact on the valuation of the Covid-19 rent reductions. They are
satisfied with the valuers conclusions.

The valuation as at 31 March 2020, was subject to a material valuation uncertainty clause due to
the uncertainty in the property market following the outbreak of Covid-19. In addition, to allow
for the immediate impact of the pandemic, the valuers reflected in their assessment a £32m
deduction that a buyer might expect to allow for the risk of increased customer defaults and
non-payment of rent. This deduction was calculated based on the assumption that two quarters
of rent would be discounted by 50%. The valuation as at 31 March 2021 does not include a material
uncertainty clause and does not include a similar deduction.

The valuation of like-for-like properties (which are not subject to refurbishment or redevelopment)
is based on the income capitalisation method which applies market-based yields to the Estimated
Rental Values (‘ERVs’) of each of the properties. Yields are based on current market expectations
depending on the location and use of the property. ERVs are based on estimated rental potential
considering current rental streams and market comparatives whilst also considering the
occupancy and timing of rent reviews at each property. Although occupancy and rent review
timings are known, and there is market evidence for transaction prices for similar properties,
there is still a significant element of estimation and judgement in estimating ERVs. As a result of
adjustments made to market observable data, the significant inputs are deemed unobservable
under IFRS 13.

When valuing properties being refurbished by Workspace, the residual value method is used. The
completed value of the refurbishment is determined as for like-for-like properties above. Capital
expenditure required to complete the building is then deducted and a discount factor is applied to
reflect the time period to complete construction and allowance made for construction and market
risk to arrive at the residual value of the property.

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Contents

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

10. INVESTMENT PROPERTIES CONTINUED
Valuation continued
The discount factor used is the property yield that is also applied to the estimated rental value
to determine the value of the completed building. Other risks such as unexpected time delays
relating to planned capital expenditure are assessed on a project-by-project basis, looking at
market comparable data where possible and the complexity of the proposed scheme.

Redevelopment properties are also valued using the residual value method. The completed
proposed redevelopment which would be undertaken by a residential developer is valued based
on the market value for similar sites and then adjusted for costs to complete, developer’s profit
margin and a time discount factor. Allowance is also made for planning and construction risk
depending on the stage of the redevelopment. If a contract is agreed for the sale/redevelopment
of the site, the property is valued based on agreed consideration.

For all methods the valuers are provided with information on tenure, letting, town planning and
the repair of the buildings and sites.

The reconciliation of the valuation report total to the amount shown in the consolidated balance
sheet as non-current assets, investment properties, is as follows:

Total per CBRE valuation report
Deferred consideration on sale of property
Head leases treated as leases under IFRS 16
Less: Reclassified as assets held for sale
Total investment properties per balance sheet

2021
£m
2,324.2
(0.6)
26.3
–
2,349.9

2020
£m
2,574.4
(5.3)
28.2
(11.0)
2,586.3

The Group’s investment properties are carried at fair value and under IFRS 13 are required to be
analysed by level depending on the valuation method adopted. The different valuation methods
are as follows:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the

entity can access at the measurement date.

As noted in the Significant judgements, key assumptions and estimates section, property
valuations are complex and involve data which is not publicly available and involves a degree
of judgement. All the investment properties are classified as Level 3, due to the fact that one or
more significant inputs to the valuation are not based on observable market data. If the degree of
subjectivity or nature of the measurement inputs changes then there could be a transfer between
Levels 2 and 3 of classification. No changes requiring a transfer have occurred during the current
or previous year.

The following table summarises the valuation techniques and inputs used in the determination of
the property valuation.

Key unobservable inputs:

Property category
Like-for-like
Completed projects
Refurbishments
Redevelopments
Head leases
Total

ERVs – per sq. ft.

Equivalent yields

Valuation
£m
1,790.5
180.7
255.7
96.7
26.3
2,349.9

Valuation
technique
A
A
A/B
A/B
n/a

Range
£12-£68
£19-£48
£20-£70
£14-£33
–

Weighted
average

Range
£42 4.5%-7.4%
£31 4.5%-6.5%
£36 3.8%-6.6%
£20 3.9%-6.7%
–

–

Weighted
average
5.8%
5.7%
5.1%
5.3%
–

A = Income capitalisation method.
B = Residual value method.

A key unobservable input for redevelopments at planning stage and refurbishments is developer’s
profit. The range is 14%–19% with a weighted average of 16%.

Costs to complete is a key unobservable input for redevelopments at planning stage with a range
of £213–£242 per sq. ft. and a weighted average of £232 per sq. ft.

Costs to complete are not considered to be a significant unobservable input for refurbishments
due to the high percentage of costs that are fixed.

Level 2 – Use of a model with inputs (other than quoted prices included in Level 1) that are directly

or indirectly observable market data.

Level 3 – Use of a model with inputs that are not based on observable market data.

Sensitivity analysis:
A +/- 10% movement in ERVs or a +/- 25 basis points movement in yields would result in the
following increase/decrease in the valuation.

£m
Like-for-like
Completed projects
Refurbishments
Redevelopments

+/- 10% in ERVs
+179/-179
+18/-18
+28/-28
+9/-7

+/- 25 bps in yields
-74/+81
-8/+8
-16/+17
-3/+5

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Contents

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

11. PROPERTY, PLANT AND EQUIPMENT

13. TRADE AND OTHER RECEIVABLES

Cost or valuation
1 April 2019
Additions during the year
Balance at 31 March 2020
Additions during the year
Disposals during the year
Balance at 31 March 2021

Accumulated depreciation
1 April 2019
Charge for the year
Balance at 31 March 2020
Charge for the year
Disposals during the year
Balance at 31 March 2021

Net book amount at 31 March 2021
Net book amount at 31 March 2020

12. OTHER INVESTMENTS
The Group holds the following investment:

15% of share capital of Excell Holdings Limited (2020: 15%)

2021
£m
7.9
7.9

Equipment
and fixtures
£m
8.7
2.3
11.0
1.2
(1.6)
10.6

5.3
0.9
6.2
2.0
(1.6)
6.6

4.0
4.8

2020
£m
7.9
7.9

In accordance with IFRS 9 the valuation of the share in Excell Holdings has been adjusted to fair
value, resulting in no movement in the financial year (2020: a reduction of £1.9m), recognised in
the consolidated statement of comprehensive income.

Current trade and other receivables
Trade receivables
Less provision for impairment of receivables
Trade receivables – net
Prepayments, other receivables and accrued income
Deferred consideration on sale of investment properties

2021
£m
16.0
(4.6)
11.4
12.8
5.1
29.3

2020
£m
11.1
(1.1)
10.0
9.9
5.3
25.2

Receivables at fair value
Included within deferred consideration on sale of investment properties is £0.6m (2020: £0.8m)
of overage which is held at fair value through profit and loss. In the current year, as the amounts
receivable are expected within the following 12 months they have been classified as current
receivables.

The deferred consideration arising on the sale of investment properties relates to cash and
overage. The overage has been fair valued by CBRE Limited using appropriate discount rates,
and will be revalued on a regular basis. This is a Level 3 valuation of a financial asset, as defined by
IFRS 13. The change in fair value recorded in the consolidated income statement, including both
current and non-current elements, was a loss of £0.2m (31 March 2020: £0.2m) (note 3(b)).

Deferred consideration on sale of investment properties:
Balance at 1 April
Cash received
Additions/reclassifications
Change in fair value
Balance at 31 March

2021
£m

5.3
–
–
(0.2)
5.1

2020
£m

2.9
(1.9)
4.5
(0.2)
5.3

Receivables at amortised cost
The remaining receivables are held at amortised cost. There is no material difference between the
above amounts and their fair values due to the short-term nature of the receivables. Trade receivables
are impaired when there is evidence that the amounts may not be collectable under the original terms
of the receivable. All the Group’s trade and other receivables are denominated in Sterling.

Trade receivables and the corresponding provision for bad debts have increased in the year to
31 March 2021 as a result of delayed payments from customers impacted by Covid-19. Receivables
outstanding for more than 30 days amount to £8.1m and are subject to a provision for bad debt of
£4.0m. The balance of £4.1m, not subject to a bad debt provision, has either been received post
year end or is covered by available tenants deposits.

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Contents

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

13. TRADE AND OTHER RECEIVABLES CONTINUED
Receivables at amortised cost continued
Movements on the provision for impairment of trade receivables are shown below:

16. BORROWINGS
(a) Balances

Balance at 1 April
Increase in provision for impairment of trade receivables
Receivables written off during the year
Balance at 31 March

14. CASH AND CASH EQUIVALENTS

Cash at bank and in hand
Restricted cash – tenants’ deposit deeds

2021
£m
1.1
4.3
(0.8)
4.6

2021
£m
183.6
7.4
191.0

2020
£m
0.7
0.8
(0.4)
1.1

2020
£m
70.3
8.9
79.2

Current
Senior Floating Rate Notes 2020 (unsecured)
5.6% Senior US Dollar Notes 2023 (unsecured)
5.53% Senior Notes 2023 (unsecured)
Non-current
Bank loans (unsecured)
5.6% Senior US Dollar Notes 2023 (unsecured)
5.53% Senior Notes 2023 (unsecured)
3.07% Senior Notes (unsecured)
3.19% Senior Notes (unsecured)
3.6% Senior Notes (unsecured)
Green Bond (unsecured)

2021
£m

–
72.6
84.0

(0.8)
–
–
79.8
119.7
99.8
297.7
752.8

2020
£m

9.0
–
–

153.0
81.0
83.9
79.8
119.7
99.8
–
626.2

Tenants’ deposit deeds represent returnable cash security deposits received from tenants and are
held in ring-fenced bank accounts in accordance with the terms of the individual lease contracts.

15. TRADE AND OTHER PAYABLES

Trade payables
Other tax and social security payable
Corporation tax payable
Tenants’ deposit deeds (note 14)
Tenants’ deposits
Accrued expenses
Deferred income – rent and service charges

In March 2021, the Group issued a green bond of £300m. At year end the bank loan facility had
been fully repaid, there are unamortised finance costs of £0.8m (2020: £1.0m) included within
borrowings.

2021
£m
10.4
3.6
–
7.4
20.7
43.4
9.5
95.0

2020
£m
4.8
5.6
0.8
8.9
25.6
26.6
10.8
83.1

(b) Net debt

Borrowings per (a) above
Adjust for:
Cost of raising finance
Foreign exchange differences

Cash at bank and in hand (note 14)
Net debt

2021
£m
752.8

3.8
(8.1)
748.5
(183.6)
564.9

2020
£m
626.2

1.9
(16.6)
611.5
(70.3)
541.2

There is no material difference between the above amounts and their fair values due to the short-
term nature of the payables.

At 31 March 2021 the Group had £250m (2020: £96m) of undrawn bank facilities, a £2m overdraft
facility (2020: £2m) and £183.6m of unrestricted cash (2020: £70.3m).

Net debt represents borrowing facilities drawn, less cash at bank and in hand. It excludes impacts
of foreign exchange differences as these are fixed via swaps, lease obligations and any cost of
raising finance as they have no future cash flows.

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Contents

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

16. BORROWINGS CONTINUED
(c) Maturity

Repayable within one year
Repayable between one year and two years
Repayable between two years and three years
Repayable between three years and four years
Repayable between four years and five years
Repayable in five years or more

Cost of raising finance
Foreign exchange differences

(d) Interest rate and repayment profile

2021
£m
148.5
–
–
–
80.0
520.0
748.5
(3.8)
8.1
752.8

2020
£m
9.0
–
154.0
148.5
–
300.0
611.5
(1.9)
16.6
626.2

(e) Derivative financial instruments
The Group has cross currency swaps to ensure the US Dollar liability streams generated from
the US Dollar Notes are fully hedged into Sterling for the life of the transaction. Through entering
into cross currency swaps the Group has created a synthetic Sterling fixed rate liability totalling
£64.5m.

These swaps have been designated as a cash flow hedge with changes in fair value dealt with in
other comprehensive income. The Group has elected to continue applying hedge accounting as
set out in IAS 39 to these swaps as permitted by IFRS 9.

Hedge effectiveness is determined at the inception of the hedge relationship, and through
periodic prospective effectiveness assessments to ensure that an economic relationship exists
between the hedged item and hedging instrument. The critical terms of this hedging relationship
perfectly matched at origination, so for the prospective assessment of effectiveness a qualitative
assessment was performed. Quantitative retrospective effectiveness tests using the hypothetical
derivative method are performed at each period end to determine the continuing effectiveness
of the relationship. Sources of hedge ineffectiveness include credit risk or changes made to the
critical terms of the hedged item or the hedged instrument.

Principal at
period end
£m

Interest rate

Interest payable

Repayable

The effects of the cash flow US Dollar swap hedging relationship is as follows:

Current
Bank overdraft due within one
year or on demand
Private Placement Notes:

5.6% Senior US Dollar Notes
5.53% Senior Notes

Non-current
Private Placement Notes:
3.07% Senior Notes
3.19% Senior Notes

3.6% Senior Notes

Bank Loan

Green Bond

–

Base+2.25%

Variable

On demand

64.5
84.0

5.6%
5.53%

Half year
Half year

April 2021
April 2021

80.0
120.0

100.0
–

300.0
748.5

3.07%
3.19%

3.6%
LIBOR+1.65%

Half yearly
Half yearly

Half yearly
Monthly

2.25%

Half yearly

August 2025
August 2027

January 2029
June 2022 &
June 2023
March 2028

Irrevocable notice was given on 31 March 2021 to repay the private placement notes due for
repayment in June 2023 on 30 April 2021, the termination costs have been reflected in exceptional
finance costs.

Carrying amount of derivative
Change in fair value of designated hedging instrument
Change in fair value of designated hedged item
Notional amount £m
Notional amount ($m)
Rate payable (%)
Maturity
Hedge ratio

The cash flow hedge was terminated in line with the repayment of the US Dollar Notes.

2021
8.7
(9.8)
8.6
64.5
100
5.66%
June 2023
1:1

2020
18.5
8.3
(4.2)
64.5
100
5.66%
June 2023
1:1

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Contents

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

16. BORROWINGS CONTINUED
(f) Financial instruments and fair values

Financial liabilities held at amortised cost
Bank loans
Private Placement Notes
Lease obligations
Green bond

Financial assets at fair value through other
comprehensive income
Derivative financial instruments:
Cash flow hedge – derivatives used for hedging
Other investments

Financial assets at fair value through profit or loss
Deferred consideration (overage)

2021
Book value
£m

2021
Fair value
£m

2020
Book value
£m

2020
Fair value
£m

(0.8)
455.9
26.3
297.7
779.1

(0.8)
478.1
26.3
297.7
801.3

153.0
473.2
28.2
–
654.4

8.7
7.9
16.6

5.1
5.1

8.7
7.9
16.6

5.1
5.1

18.5
6.9
25.4

5.3
5.3

154.0
484.1
28.2
–
666.3

18.5
6.9
25.4

5.3
5.3

In accordance with IFRS 13 disclosure is required for financial instruments that are carried or
disclosed in the financial statements at fair value. The fair values of all the Group’s financial
derivatives, bank loans and Private Placement Notes, have been determined by reference to
market prices and discounted expected cash flows at prevailing interest rates and are Level 2
valuations. There have been no transfers between levels in the year.

The different levels of valuation hierarchy as defined by IFRS 13 are set out in note 10.

(g) Financial instruments by category

Assets

a) Assets at value through profit or loss
Deferred consideration (overage)

b) Loans and receivables
Cash and cash equivalents
Trade and other receivables excluding prepayments1

c) Assets at value through other comprehensive income
Cash flow hedge – derivatives used for hedging
Other investments

Total

Liabilities

Other financial liabilities at amortised cost
Borrowings
Lease liabilities
Trade and other payables excluding non-financial liabilities2

2021
£m

5.1
5.1

191.0
14.5
205.5

8.7
7.9
16.6
227.2

2021
£m

752.8
26.3
81.9
861.0

2020
£m

5.3
5.3

79.2
11.7
90.9

18.5
6.9
25.4
121.6

2020
£m

626.2
28.2
65.9
720.3

1. Trade and other receivables exclude prepayments of £9.7m (2020: £8.2m) and non-cash deferred consideration of £5.1m

(2020: £5.3m).

2. Trade and other payables exclude other tax and social security of £3.6m (2020: £5.6m), corporation tax of nil (2020: £0.8m)

and deferred income of £9.5m (2020: £10.8m).

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Contents

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

Bank loans and
borrowings
£m
626.2

Lease liabilities
£m
28.2
–

Derivatives used for
hedging-assets
£m
18.5
–

16. BORROWINGS CONTINUED
(h) Changes in liabilities from financing activities

Balance at 1 April 2020
Changes from financing cash flows:
Proceeds from bank borrowings and Private
Placement Notes
Repayment of bank borrowings and Private
Placement Notes
Proceeds from green bond
Total changes from cash flows
Changes in fair value of derivative financial
instruments
Foreign exchange differences
Amortisation of issue costs of borrowing
Changes in leases
Interest payable
Interest paid
Total other changes
Balance at 31 March 2021

54.0

(217.0)
299.5
136.5

–
(8.5)
(1.4)
–
21.7
(21.7)
(9.9)
752.8

17. LEASE OBLIGATIONS
Lease liabilities are in respect of leased investment property.

Minimum lease payments under leases fall due as follows:

Within one year
Between two and five years
Beyond five years

Future finance charges on leases
Present value of lease liabilities

Following the adoption of IFRS 16 lease obligations, which were previously included in borrowings,
have been shown separately on the face of the balance sheet. The balance represents a non-
current liability as the payment shown within one year of £1.6m (2020: £1.7m) is offset by future
finance charges on leases of £1.6m (2020: £1.7m).

18. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICY
The Group has identified exposure to the following financial risks:
– Market risk.
– Credit risk.
– Liquidity risk.
– Capital risk management.

The policies for managing each of these risks and the principal effects of these policies on the
results for the year are summarised below:

(a) Market risk
Market risk is the risk that changes in market conditions will affect the Group’s interest rates.
Borrowings at variable rates expose the Group to cash flow interest rate risk. Borrowings at fixed
rates expose the Group to fair value interest rate risk.

The Group finances its operations through a mixture of retained profits and borrowings. The
Group borrows at both fixed and floating rates of interest and then uses interest rate and cross
currency swaps and caps to generate the desired interest and risk profile. The Group has entered
into a cross currency swap to ensure the US Dollar liability streams generated from the US Dollar
private placement notes are fully hedged into Sterling for the life of the transaction. At 31 March
2021 100% (2020: 73%) of Group borrowings were fixed or fixed through the use of interest rate
and cross currency swaps.

All transactions entered into are approved by the Board and are in accordance with the Group’s
treasury policy. The Board also monitors variances on interest rates to budget and forecast rates
to ensure that the risk relating to interest rates is being sufficiently safeguarded against. As at
year end all our borrowings drawn were all at fixed interest rate, a reasonably possible interest
rate movement of +/-0.5% would have increased and decreased net interest payable by nil (2020:
£0.8m).

Interest cover covenants in relation to Group borrowings is a ratio of 2.0x and the Group targets a
minimum cover of 2.5x. As at 31 March 2021 interest cover was 3.8x. Interest cover is calculated as
net rental income divided by finance costs (excluding exceptional finance costs).

–

–
–

–
–
–
(1.9)
1.6
(1.6)
(1.9)
26.3

2021
£m
1.6
6.6
148.4
156.6
(130.3)
26.3

–

–
–
–

(9.8)
–
–
–
–
–
(9.8)
8.7

2020
£m
1.7
6.8
156.0
164.5
(136.3)
28.2

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Contents

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

18. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICY CONTINUED
(b) Credit risk
The Group’s main financial assets are cash and cash equivalents, deposits with banks and financial
institutions and trade and other receivables.

(c) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they
fall due.

Credit risk is the risk of financial loss if a tenant or a counterparty to a financial instrument fails
to meet its contractual obligations. The Group’s exposure to this risk principally relates to the
receivables from tenants, deferred consideration on the sale of investment property and cash and
cash equivalent balances held with counterparties.

The Group’s exposure to credit risk in relation to receivables from tenants is influenced mainly by
the characteristics of individual tenants occupying its rental properties. The Group has around
4,196 lettable units with overall occupancy of 77.8% at 58 properties. The largest 10 single tenants
generate around 20% of net rent roll. As such, the credit risk attributable to individual tenants is
low.

The Group’s credit risk in relation to tenants is further managed by requiring that tenants provide
a deposit equivalent to three months’ rent on inception of lease as security against default. Total
tenant deposits held are £28.1m (2020: £34.5m). The Group monitors aged debt balances and any
potential bad debts every week, the information being reported to the Executive Committee every
month as part of the performance monitoring process. The Group’s debt recovery is consistently
high and as such is deemed a low risk area.

The Group’s approach to managing liquidity is to target a minimum headroom on loan facilities of
£50m, so as to enable it to have sufficient funds to meet financial obligations as they fall due. This
is performed via a variety of methods including daily cash flow review and forecasting, monthly
monitoring of the maturity profile of debt and the regular revision of borrowing facilities in relation
to the Group’s requirements and strategy. The Board reviews compliance with loan covenants
which include agreed interest cover and loan to value ratios, alongside review of available
headroom on loan facilities.

To manage its liquidity effectively, the Group has an overdraft facility of £2m (2020: £2m) and a
revolving loan facility of £250m (2020: £250m). At 31 March 2021 headroom excluding overdraft
and cash was £250m (31 March 2020: £96m).

The following is an analysis of the contractual undiscounted cash flows payable under financial
liabilities, derivative financial instruments and trade and other payables existing at the balance
sheet date. Contracted cash flows are based upon the loan balances and applicable interest rates
payable on these at each year end.

In light of Covid-19 the Group’s exposure to credit risk may be higher in the short term as
customers deal with the unprecedented impact of the pandemic.

Deferred consideration (cash and overage) on the sale of investment properties is contractual and
valued regularly by the external valuer based on current and future market factors. Cash and cash
equivalents and financial derivatives are held with major UK high street banks or building societies
and strict counterparty limits are operated on deposits.

The carrying amount of financial assets represents the maximum credit exposure. The maximum
exposure to credit risk at the reporting date was:

31 March 2021

Financial liabilities
Bank loans
Private placement notes
Green bond
Lease liabilities
Trade and other payables1

Cash and cash equivalents (note 14)
Trade receivables – current (note 13)
Deferred consideration – current (note 13)

2021
£m
191.0
11.4
5.1
207.5

2020
£m
79.2
10.0
5.3
94.5

Due
within 1
year
£m

Due
between
1 and
2 years
£m

Due
between
2 and
3 years
£m

Due
3 years
and
beyond
£m

Total
contracted
cash flows
£m

–
158.4
6.8
1.6
95.0
261.8

–
9.9
6.8
1.6
–
18.3

–
332.3
326.1
151.8
–
810.2

–
510.5
346.5
156.6
95.0
1,108.6

Carrying*
amount
£m

–
448.5
300.0
26.3
95.0
869.8

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Contents

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

18. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICY CONTINUED
(c) Liquidity risk continued

19. NOTES TO CASH FLOW STATEMENT
Reconciliation of profit for the year to cash generated from operations:

31 March 2020

Financial liabilities
Bank loans
Private Placement Notes
Lease liabilities
Trade and other payables1

Due
within 1
year
£m

Due
between
1 and
2 years
£m

Due
between
2 and
3 years
£m

Due
3 years
and
beyond
£m

Total
contracted
cash flows
£m

2.7
27.5
1.7
65.9
97.8

2.7
17.9
1.7
–
22.3

2.7
18.2
1.7
–
22.6

151.8
492.1
162.7
–
806.6

159.9
555.7
167.8
65.9
949.3

Carrying2
amount
£m

154.0
457.5
28.2
65.9
705.6

1 Trade and other payables exclude other tax and social security of £3.6m (2020: £5.6m), corporation tax of nil (2020: £0.8m)

and deferred income of £9.5m (2020: £10.8m).

2 Excludes unamortised borrowing costs.

(d) Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as
a going concern, and monitor an appropriate mix of debt and equity financing.

Equity comprises issued share capital, reserves and retained earnings as disclosed in the
consolidated statement of changes in equity. Debt comprises public bond, revolving loan facilities
from banks, private placement notes less cash at bank and in hand.

(Loss)/ profit before tax
Depreciation
Amortisation of intangibles
(Loss)/ profit on disposal of investment properties
Other expenses
Net loss from change in fair value of investment property
Equity settled share based payments
Finance costs
Exceptional finance costs
Changes in working capital:
Increase in trade and other receivables
(Decrease)/ Increase in trade and other payables
Cash generated from operations

2021
£m
(235.7)
2.0
0.9
0.1
0.2
257.7
2.5
23.8
16.4

(4.4)
(1.1)
62.4

2020
£m
72.5
0.9
0.5
0.8
0.2
7.5
2.6
23.0
–

(9.5)
10.2
108.7

For the purposes of the cash flow statement, cash and cash equivalents comprise the following:

2021
£m
183.6
7.4
191.0

2020
£m
70.3
8.9
79.2

The foreign currency risk on the US Dollar Private Placement Notes is fully hedged through a cross
currency swap.

Cash at bank and in hand
Restricted cash – tenants’ deposit deeds

At 31 March 2021 Group equity was £1,719.5m (2020: £1,998.0m) and Group net debt (debt less
cash at bank and in hand) was £564.9m (2020: £541.2m). Group gearing at 31 March 2021 was
33% (2020: 27%).

The Group’s borrowings are all unsecured. The loan to value covenant applicable to these
borrowings is 60% and compliance is being met comfortably. Loan to value at 31 March 2021 was
24%. This is calculated using the total CBRE investment property valuation (as per note 10) and
the current net debt (as per note 16b). Our target is to maintain loan to value below 30%. This may
from time-to-time be exceeded up to a maximum of 40% as steps are taken to reduce loan to
value to below 30%.

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Annual Report and Accounts 2021

Contents

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

20. SHARE CAPITAL AND SHARE PREMIUM

21. OTHER RESERVES

Issued: Fully paid ordinary shares of £1 each

Movements in share capital were as follows:
Number of shares at 1 April
Issue of shares
Number of shares at 31 March

2021
£m
181.1

2020
£m
180.7

2021
Number
180,747,868
365,726
181,113,594

2020
Number
180,385,498
362,370
180,747,868

The Group issued 365,726 shares (2020: 362,370 shares) during the year to satisfy the exercise of
share options with net proceeds of £0.1m (2020: £0.7m).

Share capital

Share premium

Balance at 1 April
Issue of shares
Balance at 31 March

2021
£m
180.7
0.4
181.1

2020
£m
180.4
0.3
180.7

2021
£m
295.4
0.1
295.5

2020
£m
295.1
0.3
295.4

Balance at 1 April 2019
Share based payments
Change in fair value of other investments
(note 12)
Change in fair value of derivative financial
instruments (cash flow hedge)
Balance at 31 March 2020
Share based payments
Issue of shares
Change in fair value of other investments
(note 12)
Change in fair value of derivative financial
instruments (cash flow hedge)
Balance at 31 March 2021

Equity
settled
share
based
payments
£m
17.6
2.6

Other
Investment
Reserve
£m
4.0
–

(1.9)

–

–
2.1
–
–

–

–
2.1

–
20.2
2.5
(0.4)

–

–
22.3

Merger
reserve
£m
8.7
–

Hedging
reserve
£m
(2.9)
–

–

–
8.7
–
–

–

–
8.7

–

4.1
1.2
–
–

–

(1.2)
–

Total
£m
27.4
2.6

(1.9)

4.1
32.2
2.5
(0.4)

–

(1.2)
33.1

22. INVESTMENT IN OWN SHARES
The Company has an Employee Share Ownership Trust (‘ESOT’) and a trust for the Share Incentive
Plan (‘SIP’). Shares are purchased in the market for distribution at a later date in accordance with
the terms of the various share schemes. The shares are held by independent trustees. At 31 March
2021 the number of shares held by the ESOT totalled 75,226 (2020: 75,226).

The SIP is governed by HMRC rules (note 22). At 31 March 2021 the number of shares held for the
SIP totalled 83,913 (2020: 96,026).

Balance at 1 April
Shares purchased for the trusts
Balance at 31 March

2021
£m
9.6
–
9.6

2020
£m
9.3
0.3
9.6

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Contents

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

23. SHARE BASED PAYMENTS
The Group operates a number of share schemes:

(a) Long Term Incentive Plan (‘LTIP’)
The LTIP scheme is a performance award scheme whereby shares are issued against Group
performance measures which are assessed over the three-year vesting period.

The performance measures are:
– Relative TSR.
– Total Property Return compared to the IPD benchmark.

The shares are issued at nil cost to the individuals provided the performance conditions are met.

Under the 2020 LTIP scheme 650,475 performance shares were awarded in June 2020 to
Directors and Senior management (2019 LTIP scheme: 449,250).

Details of the movements for the LTIP scheme during the year were as follows:

At 1 April 2019
Granted
Exercised
Lapsed
At 31 March 2020
Granted
Exercised
Lapsed
At 31 March 2021

LTIP

Number
1,347,009
449,250
(228,358)
(348,519)
1,219,382
650,475
(357,428)
(146,137)
1,366,292

For the 2017 LTIP scheme, which vested in June 2020, the average closing share price at the date
of exercise of shares exercised during the year was £5.85 (2016 LTIP scheme: £8.89).

A binomial model was used to determine the fair value of the LTIP grant for the Relative TSR
element of the schemes.

Assumptions used in the model were as follows:

Share price at grant
Exercise price
Average expected life (years)
Risk free rate
Average share price volatility
Correlation
TSR starting factor
Fair value per option – Relative TSR element

2020 LTIP
706p
Nil
3
0.61%
35%
46%
0.65
207p

2019 LTIP
862p
Nil
3
0.52%
21%
49%
0.92
322p

2018 LTIP
1100p
Nil
3
0.79%
28%
48%
1.14
695p

The Total Property Return compared to the IPD benchmark is a non-market based condition and
the intrinsic value is therefore the share price at date of grant of 706p for the 2020 LTIP Scheme.
At each balance sheet date, the Directors will assess the likelihood of meeting the conditions
under this element of the scheme. The impact of the revision to original estimates, if any, is
recognised in the income statement with a corresponding adjustment to equity. The assessment
at year end for the 2020 LTIP Scheme was that up to 50% of the Total Property Return element
will vest (LTIP 2019: 50%, LTIP 2018: 50%).

The expected Workspace share price volatility was determined by taking account of the daily
share price movement over a three-year period. The respective FTSE 250 Real Estate share price
volatility and correlations were also determined over the same period. The average expected term
to exercise used in the models has been adjusted, based on management’s best estimate, for
the effects of non-transferability, exercise restrictions and behavioural conditions and historical
experience.

The risk free rate has been determined from market yield curves for government zero-coupon
bonds with outstanding terms equal to the average expected term to exercise for each relevant
grant.

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Contents

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

23. SHARE BASED PAYMENTS CONTINUED
(b) Employee share option schemes
The Group operates a Save As You Earn (‘SAYE’) share option scheme. Grants under the SAYE
scheme are normally exercisable after three or five years’ saving. In accordance with UK practice,
the majority of options under the SAYE schemes are granted at a price 20% below the market
price ruling at the date of grant.

Details of the movements for the SAYE schemes during the year were as follows:

Options outstanding
At 1 April 2019
Options granted
Options exercised
Options lapsed
At 31 March 2020
Options granted
Options exercised
Options lapsed
At 31 March 2021

SAYE

Number
257,454
122,486
(138,804)
(29,115)
212,021
339,896
(8,298)
(179,770)
363,849

Weighted exercise
price
£6.25
£7.02
£5.17
£7.08
£7.21
£5.31
£6.96
£6.90
£5.60

The average closing share price at the date of exercise for the SAYE options exercised (for the
three-year 2017 and the five-year 2015 schemes) during the year was £7.37 (2020: £9.26).

The fair value has been calculated using the Black-Scholes model. Inputs to the model are
summarised as follows:

Weighted average share price at grant
Exercise price
Expected volatility
Average expected life (years)
Risk free rate
Expected dividend yield
Possibility of ceasing employment before vesting

2021
SAYE
3 year
551p
531p
34%
3
0%
7%
25%

2021
SAYE
5 year
551p
531p
33%
5
0%
7%
25%

2020
SAYE
3 year
878p
702p
21%
3
1%
4%
25%

2020
SAYE
5 year
878p
702p
26%
5
1%
4%
25%

The expected life is the average expected period to exercise. The risk free rate of return is the yield
on zero-coupon UK Government bonds of a term consistent with the assumed option life. The
expected dividend yield is based on the present value of expected future dividend payments to
expiry.

Total

Fair values per share of these options were:

SAYE – three year
SAYE – five year

2021

2020

Grant date
27 July 2020
27 July 2020

Fair value of award
78p
75p

Grant date
25 July 2019
25 July 2019

Fair value of award
154p
178p

(c) Share incentive plan (‘SIP’)
All staff were granted £1,000 worth of shares in September 2015, £2,000 in August 2017 and
£2,000 in September 2019. These shares are held in trust under an HMRC approved SIP. The
shares can be exercised following three years of employment but must be held for a further two
years in order to qualify for tax advantages. No shares were granted in the year (2020: 49,396).
12,113 (2020: 14,090) shares were exercised in the year and 3,951 (2020: 6,211) shares lapsed.

(d) Year end summary
At 31 March 2021 in total there were 1,814,054 (2020: 1,528,429) share awards/options exercisable
on the Company’s ordinary share capital. These are analysed below:

Date of grant

LTIP
22 June 2018
18 June 2019
18 June 2020
SAYE
20 July 2016 – five year
26 July 2017 – five year
26 July 2018 – three year
26 July 2018 – five year
25 July 2019 – three year
25 July 2019 – five year
27 July 2020 – three year
27 July 2020 – five year
SIP
18 September 2015
10 August 2017
5 September 2019

Exercise
price

Ordinary
shares
Number

Vested and
exercisable

Exercisable between

–
–
–

£5.18
£7.08
£8.60
£8.60
£7.02
£7.02
£5.31
£5.31

332,154
388,591
645,547

347
–
11,246
174
38,822
256
254,483
58,521

–
–
–

–
–
–
–
–
–
–
–

22.06.2021
18.06.2022
18.06.2023

01.09.2021
01.09.2022
01.09.2021
01.09.2023
01.09.2022
01.09.2024
01.09.2023
01.09.2025

–
–
–

01.03.2022
01.03.2023
01.03.2022
01.03.2024
01.03.2023
01.03.2025
01.03.2024
01.03.2026

–
–
–

8,620
30,324
44,969

8,620
30,324

18.09.2018
10.08.2020
– 05.09.2022

–
–
–

1,814,054

38,944

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Contents

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

23. SHARE BASED PAYMENTS CONTINUED
(d) Year end summary continued
The share awards/options outstanding at 31 March 2021 had a weighted average remaining
contractual life of: LTIP – 1.5 years (2020: 1.3 years), SAYE – 2.6 years (2020: 1.7 years), SIP – 0.8
years (2020: 1.4 years).

(e) Cash-settled share based payments
National Insurance payments due on the exercise of non-approved ESOS options and shares from
the LTIP are considered cash-settled share based payments.

The estimated fair value of the National Insurance cash-settled share based payments have been
calculated using the share price at the balance sheet date. At each balance sheet date the Group
revises its estimates of the number of options that are expected to vest. It recognises the impact
of the revision to original estimates, if any, in the income statement.

(f) Share based payment charges
The Group recognised a total charge in relation to share based payments as follows:

Equity settled share based payments
Cash-settled share based payments

2021
£m
2.3
0.2
2.5

2020
£m
2.6
–
2.6

The total liability at the end of the year in respect of cash-settled share based schemes was £0.4m
(2020: £0.5m).

24. RELATED PARTY TRANSACTIONS
Key management for the purposes of related party disclosure under IAS 24 are taken to be the
Executive Board Directors, the Non-Board Executive Directors and the Non-Executive Directors.
Key management compensation is set out below:

Key management compensation:
Short term employee benefits
Share based payments
Total

2021
£m
2.9
–
2.9

2020
£m
3.2
1.4
4.6

25. CAPITAL COMMITMENTS
At the year end the estimated amounts of contractual commitments for future capital expenditure
not provided for were:

Investment property construction

2021
£m
4.2

2020
£m
4.3

26. SUBSIDIARY AND OTHER RELATED UNDERTAKINGS
The Company’s subsidiary and other related undertakings at 31 March 2021, and up to the date of
signing the financial statements, are listed below.

Except where indicated otherwise, the Company owns 100% of the ordinary share capital of
the following subsidiary undertakings incorporated and operating in the UK, all of which are
consolidated in the Group’s financial statements.

UK subsidiaries
The registered address of all UK subsidiaries is Canterbury Court, Kennington Park, 1-3 Brixton Road,
London SW9 6DE.

Name
Workspace 12 Limited
Workspace 13 Limited
Workspace 14 Limited
Workspace Glebe Limited
Glebe Three Limited
LI Property Services Limited
Workspace Management Limited
Workspace 1 Limited1
Workspace 10 Limited
Workspace 11 Limited
Workspace 15 Limited
Workspace Holdings Limited
Anyspacedirect.co.uk Limited
Workspace Newco 1 Limited
Workspace Newco 2 Limited

Nature of business
Property Investment
Property Investment
Property Investment
Non-trading
Non-trading
Insurance Agents
Property Management
Dormant
Dormant
Dormant
Dormant
Non-trading
Non-trading
Dormant
Dormant

100% of the ordinary share capital of these subsidiaries is held by other Group companies.

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Contents

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

PARENT COMPANY BALANCE SHEET
AS AT 31 MARCH 2021

26. SUBSIDIARY AND OTHER RELATED UNDERTAKINGS CONTINUED
Non-UK subsidiaries

Name
Workspace 16 (Jersey) Limited Jersey

Country of
incorporation

Workspace 17 (Jersey) Limited Jersey

Workspace Salisbury Limited1

Jersey

Centro Property Limited1

Guernsey

Registered address
Gaspé House,
66-72 The Esplanade, St Helier,
Jersey JE2 3QT
44 Esplanade, St Helier, Jersey
JE4 9WQ
44 Esplanade, St Helier, Jersey
JE4 9WQ
Martello Court, Admiral Park,
St Peter Port, Guernsey GY1 3HB

100% of the ordinary share capital of these subsidiaries is held by other Group companies.

Nature of business
Non-trading

Fixed assets
Investments
Derivative financial instruments

Holding

Company
Property

Investment
Non-trading

Current assets
Debtors: amounts falling due within one year
Cash and cash equivalents

Total assets

27. PENSION COMMITMENTS
The Group operates a defined contribution pension scheme. The assets of the scheme are held
separately from those of the Group in an independently administered fund. The pension cost
charge for this scheme in the year was £0.8m (2020: £0.7m) representing contributions payable
by the Group to the fund and is charged through operating profit.

The Group’s commitment with regard to pension contributions, consistent with the prior year,
ranges from 6% to 16.5% of an employee’s salary. The pension scheme is open to every employee
in accordance with the Government auto-enrolment rules. The number of employees, including
Directors, in the scheme at the year end was 210 (2020: 202).

28. LEASES
The majority of the Group’s tenant leases are granted with a rolling three to six-month tenant
break clause, although prior year property acquisitions have included customer leases which are
much longer, with fewer break clauses. The future minimum non-cancellable rental receipts under
leases granted to tenants are shown below.

Current liabilities
Creditors: amounts falling due within one year
Borrowings
Creditors: amounts falling due after more than one year
Borrowings
Total liabilities

Net assets

Capital and reserves
Share capital
Share premium
Investment in own shares
Other reserves
Retained earnings
Total shareholders’ equity

Notes

C
F

E
F

2021
£m

928.5
8.7
937.2

542.2
74.0
616.2
1,553.4

(110.8)
(156.6)
(267.4)
(596.2)
(863.6)

2020
£m

801.0
18.5
819.5

715.3
0.2
715.5
1,535.0

(154.4)
(9.0)
(163.4)
(617.3)
(780.7)

689.8

754.3

181.1
295.6
(9.6)
31.0
191.7
689.8

180.7
295.6
(9.6)
29.5
258.1
754.3

Land and buildings:
Within one year
Between two and five years
Beyond five years

2021
£m
56.3
45.4
24.3
126.0

2020
£m
72.7
65.3
23.6
161.6

The notes on pages 236 to 238 form part of these financial statements.

The financial statements on pages 235 to 238 were approved by the Board of Directors on 2 June
2021 and signed on its behalf by:

29. POST BALANCE SHEET EVENTS
On the 31 March 2021 the Group gave notice to make an early repayment of the $100m & £84m
private placement notes due June 2023, which were repaid in April 2021. The costs in relation to
the termination are reflected in exceptional finance costs as shown in note 4.

Graham Clemett
Director
Workspace Group PLC
Registered number 2041612

Dave Benson
Director

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Contents

PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2021

NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS

Balance at 31 March 2019
(Loss)/ profit for the year
Other comprehensive income for
the year
Total comprehensive income
Transactions with owners:
Share issues
Dividends paid
Own shares
Share based payments
Balance at 31 March 2020
(Loss)/ profit for the year
Other comprehensive income for
the year
Total comprehensive income
Transactions with owners:
Share issues
Dividends paid
Own shares
Share based payments
Balance at 31 March 2021

Share
capital
£m
180.4
–

–
–

0.3
–
–
–
180.7
–

–
–

0.4
–
–
–
181.1

Share
premium
£m
295.1
–

Investment
in own
shares
£m
(9.3)
–

Other
reserves
£m
23.4
–

Retained
earnings
£m
321.1
(1.8)

–
–

0.5
–
–
–
295.6
–

–
–

–
–
–
–
295.6

–
–

–
–
(0.3)
–
(9.6)
–

–
–

–
–
–
–
(9.6)

3.5
3.5

–
–
–
2.6
29.5
–

(0.6)
(0.6)

(0.4)
–
–
2.5
31.0

–
(1.8)

–
(61.2)
–
–
258.1
(22.2)

–
(22.2)

–
(44.2)
–
–
191.7

Total
share-
holders’
equity
£m
810.7
(1.8)

3.5
1.7

0.8
(61.2)
(0.3)
2.6
754.3
(22.2)

(0.6)
(22.8)

–
(44.2)
–
2.5
689.8

The notes on pages 236 to 238 form part of these financial statements.

A. ACCOUNTING POLICIES
These financial statements were prepared in accordance with Financial Reporting Standard 101
Reduced Disclosure Framework (“FRS 101”).

Basis of accounting
The financial statements are prepared on a going concern basis under the historical cost
convention and in accordance with the Companies Act 2006 and applicable accounting standards
in the UK. The financial statements are presented in Sterling.

In preparing these financial statements, the Company applies the recognition, measurement and
disclosure requirements of international accounting standards in conformity with the requirements
of the Companies Act 2006 (‘Adopted IFRSs’), but makes amendments where necessary in order
to comply with Companies Act 2006 and has set out below where advantage of the FRS 101
disclosure exemptions has been taken.

a) The requirements of IAS 7 to provide a statement of cash flows and related notes for the year.

b) The requirements of IAS 1 to provide a statement of compliance with IFRS.

c) The requirements of IAS 1 to disclose information on the management of capital.

d) The requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting

Estimates and Errors to disclose new IFRSs that have been issued but are not yet effective.

e) The requirements in IAS 24 Related Party Disclosures to disclose related party transactions

entered into between two or more members of a Group, provided that any subsidiary which is a
party to the transaction is wholly owned by such a member.

f) The requirements of IFRS 7 on financial instruments disclosures.

g) The requirements of paragraphs 91-99 of IFRS 13 Fair Value Measurement to disclose

information of fair value valuation techniques and inputs.

The above disclosure exemptions are allowed because equivalent disclosures are included in the
Group consolidated financial statements.

Significant accounting policies
i. Investments
Investments are carried in the Company’s balance sheet at cost less impairment. Impairment
reviews are performed by the Directors when there has been an indication of potential
impairment.

Impairment and reversal of impairment is taken to the profit and loss account.

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Annual Report and Accounts 2021

Contents

NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
CONTINUED

A. ACCOUNTING POLICIES CONTINUED
Significant accounting policies continued
ii. Share based payment and investment in own shares
Incentives are provided to employees under share option schemes. The Company has established
an Employee Share Ownership Trust (‘ESOT’) to satisfy part of its obligation to provide shares
when Group employees exercise their options. The Company provides funding to the ESOT to
purchase these shares.

The Company has also established an employee Share Incentive Plan (‘SIP’) which is governed by
HMRC rules.

The Company itself has no employees. When the Company grants share options to Group
employees as part of their remuneration, the expense of the share options is reflected in a
subsidiary undertaking, Workspace Management Limited. The Company recognises this as an
investment in subsidiary undertakings with a corresponding increase to equity.

The disclosure requirements for share based payments are met in note 23 of the Group
consolidated financial statements.

B. PROFIT FOR THE YEAR
As permitted by the exemption in Section 408 of the Companies Act 2006, the profit and
loss account of the Company is not presented as part of these financial statements. The loss
attributable to shareholders, before dividend payments, dealt with in the financial statements of
the Company was £22.2m (2020: £1.8m). No dividends were received in the year from subsidiary
undertakings (2020: nil).

Dividend payments are disclosed in note 7 to the consolidated financial statements.

C. INVESTMENTS

iii. Borrowings
Details of borrowings are described in note F to the Parent Company financial statements. Costs
associated with the raising of finance are capitalised, amortised over the life of the instrument and
charged as part of interest costs.

Cost
Balance at 31 March 2020
Additions in the year
Balance at 31 March 2021

iv. Derivative financial instruments and hedge accounting
The accounting policy for derivative financial instruments and hedge accounting are the same as
those for the Group and are set out on page 216. Disclosure requirements are provided in note 16
to the Consolidated financial statements.

v. Foreign currency translation
The accounting policy for foreign currency translation is the same as that for the Group and is set
out on page 216.

Taxation
Current income tax is tax payable on the taxable income for the year and any prior year
adjustment, and is calculated using tax rates that are relevant to the financial year.

Impairment
Balance at 31 March 2020 and 31 March 2021

Net book value at 31 March 2021
Net book value at 31 March 2020

Workspace 14 Limited issued £125m preference shares in the year to Workspace group PLC.

D. DEBTORS

Amounts falling due within one year
Amounts owed by Group undertakings
Corporation tax asset

2021
£m
542.1
0.1
542.2

2020
£m
715.0
0.3
715.3

Amounts owed by Group undertakings are unsecured and repayable on demand. Interest is
charged to Group undertakings.

Investment
in subsidiary
undertakings
£m

935.3
127.5
1,062.8

–
134.3

928.5
801.0

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Contents

NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
CONTINUED

E. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Amounts owed to Group undertakings
Taxation and social security
Accruals and deferred income

2021
£m
90.0
–
20.8
110.8

2020
£m
148.4
2.1
3.9
154.4

Maturity analysis of borrowings:
Repayable within one year
Repayable between one and two years
Repayable between two and three years
Repayable between three and four years
Repayable between four and five years
Repayable in five years or more

Amounts owed to Group undertakings are unsecured and repayable on demand. Interest is paid
to Group undertakings.

The following derivative financial instruments are held:

2021
£m
148.5
–
–
–
80.0
520.0
748.5

2020
£m
9.0
–
154.0
148.5
–
300.0
611.5

F. BORROWINGS

Borrowings and financial instruments

Interest rate

Repayable

2021
£m

2020
£m

Term/expiry
Cash flow hedge – cross currency swap $100m/£64.5m 5.66% June 2023

Amount

Rate
payable
(%)

2021
£m
8.7

2020
£m
18.5

Creditors: amounts falling due within
one year
Senior Floating Rate Notes 2020
5.6% Senior US Dollar Notes 2023
5.53% Senior Notes 2023
Creditors: amounts falling due after more
than one year
Bank loan

3.07% Senior Notes
3.19% Senior Notes
3.6% Senior Notes
Green Bond
Total borrowings
Less cost of raising finance
Foreign exchange differences
Net borrowings

All the above borrowings are unsecured.

LIBOR+3.5%
5.6%
5.53%

June 2020
April 2021
April 2021

–
64.5
84.0

9.0
64.5
84.0

The cash flow hedge was terminated in line with the repayment of the US Dollar Notes.

G. CAPITAL AND RESERVES
Movements and notes applicable to share capital, share premium account, investment in own
shares, other reserves and share based payment reserve are shown in notes 20 to 23 on pages 231
to 234 and in the statement of changes in equity.

LIBOR+1.65%

June 2022 &
June 2023
August 2025
3.07%
3.19%
August 2027
3.6% January 2029
March 2028

2.25%

–

154.0

80.0
120.0
100.0
300.0
748.5
(3.8)
8.1
752.8

80.0
120.0
100.0
–
611.5
(1.9)
16.7
626.3

Other reserves:
Balance at 31 March 2019
Share based payments
Change in fair value of derivative financial instruments
Balance at 31 March 2020
Share based payments
Issue of shares
Change in fair value of derivative financial instruments
Balance at 31 March 2021

Equity
settled
share
based
payments
£m
17.6
2.6
–
20.2
2.5
(0.4)
–
22.3

Merger
Reserve
£m
8.7
–
–
8.7
–
–
–
8.7

Hedging
Reserve
£m
(2.9)
–
3.5
0.6
–
–
(0.6)
–

Total
£m
23.4
2.6
3.5
29.5
2.5
(0.4)
(0.6)
31.0

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Contents

FIVE-YEAR PERFORMANCE (UNAUDITED)
2017–2021

PERFORMANCE METRICS (UNAUDITED)

Rents receivable
Service charges and other income
Revenue
Trading profit before interest
Net interest payable1
Trading profit after interest
(Loss)/profit before taxation
(Loss)/profit after taxation
Basic (loss)/earnings per share
Dividends per share
Dividends (total)
Investment properties
Other assets less liabilities
Net debt
Net assets
Gearing
Loan to value
EPRA Net Tangible Assets (NTA)

1 Excludes exceptional items.

31 March
2021
£m
118.0
24.3
142.3
62.5
(23.8)
38.7
(235.7)
(235.7)
(130.3)p
17.75p
32.1
2,349.9
(65.5)
(564.9)
1,719.5
33%
24%
£9.38

31 March
2020
£m
132.7
28.7
161.4
104.3
(23.3)
81.0
72.5
72.1
40.0p
36.16p
65.4
2,586.3
(47.1)
(541.2)
1,998.0
27%
21%
£10.88

31 March
2019
£m
123.7
25.7
149.4
93.9
(21.5)
72.4
137.3
137.3
78.9p
32.87p
59.3
2,591.4
(29.2)
(580.2)
1,982.0
29%
22%
£10.85

31 March
2018
£m
106.1
22.8
128.9
79.5
(18.8)
60.7
170.4
171.4
104.8p
27.39p
44.9
2,288.7
(58.9)
(517.1)
1,712.9
30%
23%
£10.36

31 March
2017
£m
86.8
22.0
108.8
64.3
(13.6)
50.7
88.8
88.7
54.5p
21.07p
34.4
1,839.0
(18.2)
(242.3)
1,578.5
15%
13%
£9.53

Workspace Group:
Number of estates
Lettable floorspace (million sq. ft.)
Number of lettable units
Average unit size (sq. ft.)
Rent roll of occupied units
Overall rent per sq. ft.
Overall occupancy
Enquiries (number)
Lettings (number)
EPRA Measures
EPRA Earnings per share
EPRA Net Tangible Asset per share

31 March
2021
£m

31 March
2020
£m

31 March
2019
£m

31 March
2018
£m

31 March
2017
£m

58
3.9
4,196
942

64
3.9
4,796
975

66
3.7
4,539
979

59
3.9
4,009
922

68
3.6
4,306
827
£103.9m £132.8m £127.5m £112.9m £89.5m
£28.41
£38.45
87.0%
84.8%
12,724
12,575
1,182
1,238

£33.90
77.8%
8,870
1,146

£36.05
85.5%
12,189
1,111

£39.18
87.0%
13,041
1,454

21.3p
£9.38

44.5p
£10.88

40.3p
£10.85

37.8p
£10.36

30.2p
£9.53

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Annual Report and Accounts 2021

Contents

PROPERTY PORTFOLIO 2021 (UNAUDITED)

Property name
Archer Street Studios
Barley Mow Centre
Brickfields
Canalot Studios
Cannon Wharf
Cargo Works
Centro Buildings
China Works
Chiswick Studios
Chocolate Factory (part)
Chocolate Factory (part)
Clerkenwell Workshops
E1 Studios
East London Works
Edinburgh House
Exmouth House
Fitzroy Street
160 Fleet Street
Fuel Tank
Garratt Lane
338 Goswell Road
Grand Union Studios
60 Gray's Inn Road
Havelock Terrace
Highway Business Park
Ink Rooms
Kennington Park
Leroy House
Lock Studios
Mallard Place
Mare Street Studios
Metal Box Factory
Mirror Works (formerly Marshgate)
Morie Street
Pall Mall Deposit

Postcode
W1D 7AZ
W4 4PH
E2 8HD
W10 5BN
SE8 5EN
SE1 9PG
NW1 0DU
SE1 7SJ
W4 5PY
N22 6XJ
N22 6XJ
EC1R 0AT
E1 1DU
E1 1DU
SE11 5DP
EC1R 0JH
W1T 4BQ
EC4A 2DQ
SE8 3DX
SW18 4LZ
EC1V 7LQ
W10 5AD
WC1X 8AQ
SW8 4AS
E1 9HR
WC1X 0DS
SW9 6DE
N1 3QP
E3 3YD
N22 6TS
E8 3QE
SE1 0HS
E15 2NH
SW18 1SL
W10 6BL

Category
Like-for-like
Refurbishment
Completed
Like-for-like
Like-for-like
Like-for-like
Like-for-like
Like-for-like
Like-for-like
Redevelopment
Refurbishment
Like-for-like
Like-for-like
Like-for-like
Like-for-like
Like-for-like
Refurbishment
Completed
Like-for-like
Redevelopment
Like-for-like
Like-for-like
Like-for-like
Refurbishment
Redevelopment
Like-for-like
Like-for-like
Like-for-like
Completed
Redevelopment
Completed
Like-for-like
Redevelopment
Like-for-like
Refurbishment

Lettable
floor area
sq. ft.
14,984
75,880
56,755
49,513
32,619
71,212
213,050
68,808
14,254
51,026
61,778
52,613
40,797
38,331
65,186
57,560
92,669
42,103
35,189
43,000
41,490
63,640
36,138
58,164
19,860
22,235
366,369
46,802
54,477
10,150
54,887
106,316
0
21,711
58,777

Net rent roll of
occupied units
£000
513,355
1,147,562
1,653,409
997,312
523,864
2,710,131
9,291,188
1,767,495
496,844
250,733
678,240
1,723,587
891,208
1,164,067
1,961,570
3,223,159
6,011,460
858,826
533,891
300,000
1,662,048
1,831,772
1,484,580
1,017,721
247,435
960,644
8,891,554
890,340
562,587
130,000
48,598
3,480,885
0
413,718
476,829

Postcode
SE21 8EN
N22 6XF
WC1X 8LZ
E2 6GG
E14 9RL
TW8 0GP
SW20 0JK
SW20 0JK
SW18 4UQ
EC2M 5QQ
N5 2EF

Property name
Parkhall Business Centre
Parma House
Peer House
Pill Box
Poplar Business Park
Q West
Rainbow Industrial Park (Part)
Rainbow Industrial Park (Part)
Riverside
Salisbury House
ScreenWorks
The Biscuit Factory (Cocoa Studios) SE16 4DG
SE16 4DG
The Biscuit Factory (Part)
SE16 4DG
The Biscuit Factory (Part)
EC2A 4PS
The Frames
SE1 3ER
The Leather Market
W4 5PY
The Light Box
SW18 4GQ
The Light Bulb (part)
SW18 4WW
The Light Bulb (part)
SE1 0LH
The Print Rooms
EC1N 7RJ
The Record Hall
W10 6BN
The Shaftesbury Centre
W14 0DA
The Shepherds Building
SE13 7SH
Thurston Road
SE11 5JH
Vox Studios
N1 7EU
Wenlock Studios
W10 5JJ
Westbourne Studios

Category
Completed
Redevelopment
Like-for-like
Like-for-like
Like-for-like
Redevelopment
Completed
Redevelopment
Like-for-like
Like-for-like
Like-for-like
Like-for-like
Like-for-like
Refurbishment
Like-for-like
Like-for-like
Like-for-like
Like-for-like
Redevelopment
Like-for-like
Like-for-like
Like-for-like
Like-for-like
Redevelopment
Like-for-like
Completed
Refurbishment

Lettable
floor area
sq. ft.
124,739
34,983
10,222
50,409
65,178
54,960
21,180
89,934
101,786
232,272
63,974
39,298
126,245
88,080
51,974
147,006
78,489
52,644
0
46,064
56,730
12,627
148,617
0
107,103
30,938
57,745

Net rent roll of
occupied units
£000
1,714,806
203,976
337,888
916,131
953,734
462,258
268,156
237,318
1,741,716
10,347,859
1,573,614
827,296
2,291,525
1,199,434
1,900,232
3,651,706
1,483,413
1,123,055
0
1,216,912
1,485,889
243,427
6,507,208
0
3,050,879
473,907
937,730

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Annual Report and Accounts 2021

GLOSSARY OF TERMS

Contents

Earnings per share (‘EPS’) is the profit after
taxation divided by the weighted average
number of shares in issue during the period.

Employee Share Ownership Trust (‘ESOT’) is
the trust created by the Group to hold shares
pending exercise of employee share options.

EPRA EPS is a definition of earnings per share
as set out by the European Public Real Estate
Association (‘EPRA’). It is based on operating
earnings where profit before tax is adjusted to
exclude the impact of any changes in property
valuation, gains or losses on property disposals
and fair value movements.

Equivalent yield is a weighted average of
the initial yield and reversionary yield and
represents the return a property will produce
based upon the timing of the occupancy of the
property and timing of the income receivable.
This is approximated by the reversionary yield
multiplied by the Group trend occupancy
of 90%.

Estimated Rental Value (‘ERV’) or market
rental value is the Group’s external valuers’
opinion as to the open market rent which, on
the date of valuation, could reasonably be
expected to be obtained on a new letting or
rent review.

EPRA net asset value (‘EPRA NAV’) is a
definition of net asset value as set out by
EPRA. It is adjusted to include investment
properties at fair value and to exclude certain
items not expected to crystallise in a long-term
investment property business model.

Exceptional items are significant items of
income or expense that by virtue of their size,
incidence or nature are shown separately on
the consolidated income statement to enable
a full understanding of the Group’s financial
performance.

EPRA net reinstatement value (‘EPRA NRV’)
represents the value required to rebuild an
entity, assuming that no asset sales takes place.
Assets and liabilities that are not expected to
crystallise in normal circumstances, such as fair
value movements on derivatives and deferred
tax on property valuation movements, are
excluded.

EPRA net tangible assets (‘EPRA NTA’)
focuses on a company’s tangible assets
and assumes that entities buy and sell
assets, thereby crystallising certain levels of
unavoidable deferred tax.

EPRA net disposal value (‘EPRA NDV’)
represents the shareholders’ value under a
disposal scenario, where deferred tax, financial
instruments and certain other adjustments are
calculated to the full extent of their liability, net
of any resulting tax.

Gearing is the Group’s net debt as a
percentage of net assets.

GDIs are green debt instruments as referred to
in the Green Finance Framework.

Green Finance Framework is aligned with
ICMA’s Green Bond Principles (2018 edition)
and LMA’s Green Loan Principles (2021 edition)
and addresses UN SDGs 7, 11, 12 and 13. The
framework allows Workspace to issue a variety
of GDIs and sets out the principles for the use
and management of proceeds from GDIs.

ICMA is the International Capital Market
Association.

Initial yield is the net rents generated by
a property or by the portfolio as a whole
expressed as a percentage of its valuation.

Interest cover is the number of times net
interest payable is covered by net rental
income.

LIBOR is the British Bankers’ Association
London Interbank Offer Rate.

Property Income Distribution (‘PID’) a
dividend generally subject to withholding tax
that a UK REIT is required to pay from its tax-
exempted property rental business and which
is taxable for UK resident shareholders at their
marginal tax rate

Like-for-like are those properties with
stabilised occupancy, excluding recent
acquisitions and buildings impacted by
significant refurbishment or redevelopment
activity.

REIT is a Real Estate Investment Trust as set
out in the UK Finance Act 2006 Sections
106 and 107. REITs pay no corporation tax
on profits derived from their property rental
business.

Loan to value (‘LTV’) is net debt divided by
the current value of properties owned by the
Group as valued by CBRE.

Rent roll is the annualised net rent of occupied
units for a property or portfolio of properties
at a reporting date.

LMA is the Loan Market Association.

MSCI IPD MSC Inc is a company that produces
independent benchmarks of property returns
under the brand IPD.

Net asset value per share (‘NAV’) is net assets
divided by the number of shares at the period
end.

Net debt is the amount drawn on bank and
other loan facilities, including overdrafts,
less cash deposits. This excludes any foreign
exchange movements.

Net rents are rents excluding any contracted
increases and after deduction of inclusive
service charge revenue.

Reversion/reversionary income is the increase
in rent estimated by the Group’s external
valuers, where the net rent is below the
current estimated rental value. The increases
to rent arise on rent reviews, letting of vacant
space, expiry of rent free periods or rental
increase steps.

Reversionary yield is the anticipated yield,
which the initial yield will rise to once the
rent reaches the estimated rental value.
It is calculated by dividing the ERV by
the valuation.

Total Accounting Return is the growth in
absolute EPRA net asset per share plus
dividends paid in the year as a percentage of
the opening EPRA net asset value per share.

Occupancy is the area of space let divided by
the total net lettable area (excluding land used
for open storage) expressed as a percentage.

Profit/(loss) before tax (‘PBT’) is income less
all expenditure other than taxation.

Total Property Return is a percentage
measure calculated by MSCI IPD and defined in
the MSCI Global Methodology for Real Estate
Investment as the percentage of value change
plus net income accrued relative to the capital
employed.

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Workspace Group PLC
Annual Report and Accounts 2021

GLOSSARY OF TERMS CONTINUED

Total Shareholder Return (‘TSR’) is the
growth in ordinary share price as quoted on
the London Stock Exchange plus dividends
per share received for the year, expressed as a
percentage of the share price at the beginning
of the year.

Trading profit after interest is net rental
income, less administrative expenses
and finance costs (excluding exceptional
finance costs).

UN SDGs is UN Sustainable Development
Goals which are addressed in the Green
Finance Framework.

Contents

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Annual Report and Accounts 2021

INVESTOR INFORMATION

Registrar
All general enquiries concerning ordinary
shares in Workspace Group PLC should be
addressed to:

Company Secretary
Carmelina Carfora

The Company’s advisers include:

Independent auditors
KPMG LLP
15 Canada Square
London E14 5GL

Solicitors
Slaughter and May
1 Bunhill Row
London EC1Y 8YY

Clearing bankers
NatWest
250 Bishopsgate
London EC2M 4AA

Joint stockbrokers
JP Morgan
25 Bank Street
London E14 5JP

Stifel Nicolaus Europe Limited
150 Cheapside
London EC2V 6ET

Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
Telephone: +44 (0)370 707 1413

Alternatively, shareholders can contact
Computershare online via their free Investor
Centre facility. Shareholders have the ability to
set up or amend bank details for direct credit
of dividend payments, amend address details,
view payment history and access information
on the Company’s share price. For more
information or to register, please visit
www.investorcentre.co.uk

Website
The Company has an investor website which
holds, amongst other information, a copy of
the latest Annual Report and Accounts, a list of
properties held by the Group and copies of all
press announcements. The site can be found at
www.workspace.co.uk/investors

Registered office and headquarters
Canterbury Court
Kennington Park
1-3 Brixton Road London SW9 6DE

Registered number: 2041612

Telephone: +44 (0)20 7138 3300
Facsimile: +44 (0)20 7247 0157
Web: www.workspace.co.uk
Email: investor.relations@workspace.co.uk

Contents

Products are made using a mixture of materials from
FSC-certified forests, recycled materials, and/or FSC
controlled wood. While controlled wood is not from FSC
certified forests, it mitigates the risk of the material originating
from unacceptable sources.

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Workspace Group PLC
Canterbury Court
Kennington Park
1-3 Brixton Road
London
SW9 6DE

Telephone: +44 (0)20 7138 3300
Web: www.workspace.co.uk
Email: investor.relations@workspace.co.uk

If you require information regarding
business space in London, call
+44 (0)20 7369 2390 or visit:

www.workspace.co.uk

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